RBC to price direct investment notes linked to stable growth basket

By Angela McDaniels

Tacoma, Wash., May 2 – Royal Bank of Canada plans to price direct investment notes due June 6, 2017 linked to a stable growth basket, according to an FWP filing with the Securities and Exchange Commission.

The equally weighted basket is composed of the stocks of Ametek, Inc., Aon plc, Amphenol Corp., Chubb Ltd., C.H. Robinson Worldwide, Inc., General Dynamics Corp., General Mills, Inc., Johnson & Johnson, Lockheed Martin Corp., McDonald's Corp., Medtronic, plc, Marsh & McLennan Cos., Inc., Stryker Corp., United Parcel Service, Inc., Verizon Communications Inc. and Xylem Inc.

The reference stocks represent 16 common stocks identified by RBC Capital Markets due to factors such as their potential for positive earnings, consistent operating results and lower volatility and rated as outperform by RBC Capital Markets analysts.

Interest is payable quarterly. The amount of each interest payment, if any, will depend on the amount of dividends paid on each basket stock during the preceding quarter and will equal, for each $1,000 principal amount, 97.75% of the sum of the dividend amounts for each of the basket stocks.

The dividend amount for each stock equals (a) $1,000 divided by the initial price of the applicable stock multiplied by (b) the applicable component weighting multiplied by (c) 100% of the gross cash distributions (including ordinary and extraordinary dividends) per share declared by the applicable stock issuer where the date that the applicable stock has commenced trading ex-dividend on its primary U.S. securities exchange as to each relevant distribution occurs during the relevant interest calculation period.

However, in the case of Chubb, only 65% of the gross cash distributions will be included towards the dividend amount. This percentage is designed to reflect the approximate percentage of a dividend that a hypothetical holder of Chubb would receive after giving effect to applicable withholding taxes of Switzerland.

For each $1,000 principal amount of notes, the payout at maturity will be the product of $977.50 and the percentage amount.

The percentage amount will equal an amount, expressed as a percentage, equal to (a) 100% plus (b) the sum of the weighted returns for the basket stocks. The payout will be less than par if the percentage amount is less than 102.3%.

RBC Capital Markets, LLC is the underwriter.

The notes will price May 24.

The Cusip number is 78012KNV5.

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