By Angela McDaniels
Tacoma, Wash., July 25 – Royal Bank of Canada priced $4 million of exchange-traded notes due July 19, 2034 linked to the Yorkville MLP Distribution Growth Leaders Liquid PR index, according to a 424B2 filing with the Securities and Exchange Commission.
The issuer expects to issue up to $100 million of the notes. Additional notes will be sold from time to time at varying prices.
The index is a price return index comprised of equity securities of 25 master limited partnerships. The 25 securities are limited partnership interests of MLPs chosen for inclusion in the index according to a proprietary scoring model developed by Yorkville Capital Management LLC, which evaluates various financial measures to rank potential MLPs for inclusion in the index.
The index was established on Jan. 8. As of June 30, the top five index constituents are Energy Transfer Equity LP with a 16.13% weight, Plains All American Pipeline LP with a 9.78% weight, Magellan Midstream Partners LP with a 7.24% weight, Williams Partners LP with a 6.2% weight and Atlas Energy LP with a 6.07% weight.
RBC Capital Markets, LLC is the underwriter.
The notes are expected to be listed on the NYSE Arca under the ticker symbol “YGRO.”
Coupon
The notes pay a variable coupon each quarter equal to the MLP distribution amount minus the investor fee. To the extent that the MLP distribution amount is less than the investor fee, there will be no coupon payment made that quarter, and an amount equal to the absolute value of the difference between the two (the “fee shortfall”) will be added to the investor fee for the next coupon.
The MLP distribution amount equals the gross cash distributions that a reference holder would have been entitled to receive for the index constituents during the quarter.
A reference holder is a hypothetical holder of a number of units of each index constituent equal to the number of units of that index constituent multiplied by 0.0852079, which is the quotient of $20 divided by the initial index level.
The investor fee is (a) (i) 0.9% per year multiplied by (ii) the number of days in the coupon period divided by 365 multiplied by (iii) par of $20 multiplied by (iv) the index factor – which is the closing index level divided by the initial index level – plus (b) the fee shortfall from the previous coupon valuation date, if any.
Redemption
The notes are putable subject to a minimum of 50,000 ETNs and, if the issuer chooses, a fee of up to 0.125%. Beginning Jan. 29, 2015, the notes are callable in whole but not in part.
The payout at maturity or upon redemption will be par of $20 plus the index return plus the final coupon, if any, minus the fee shortfall, if any.
| Issuer: | Royal Bank of Canada
|
| Issue: | Exchange-traded notes
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| Underlying: | Yorkville MLP Distribution Growth Leaders Liquid PR index
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| Amount: | $4 million
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| Maturity: | July 19, 2034
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| Coupon: | Variable amount payable quarterly equal to the gross cash distributions that a reference holder would have been entitled to receive for the index constituents during the quarter minus an investor fee; if the MLP distribution amount is less than the investor fee, no coupon will be paid and the absolute value of the difference between the two (the “fee shortfall”) will be added to the investor fee for the next coupon
|
| Price: | Par of $20
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| Payout at maturity: | Par plus the index return plus the final coupon, if any, minus the fee shortfall, if any
|
| Put option: | Subject to a minimum of 50,000 ETNs and, if the issuer chooses, a fee of up to 0.125%
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| Put option: | In whole but not in part beginning Jan. 29, 2015
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| Initial index level: | 234.72
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| Pricing date: | July 24
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| Settlement date: | July 29
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| Underwriter: | RBC Capital Markets, LLC
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| Fees: | None
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| Cusip: | 78011D104
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