BMO plans notes linked to Raymond James quality yield stock basket

By Angela McDaniels

Tacoma, Wash., Sept. 9 – Bank of Montreal plans to price notes due Sept. 28, 2018 linked to a basket of 22 equally weighted stocks selected in September by Raymond James & Associates, Inc., according to a 424B2 filing with the Securities and Exchange Commission.

The underlying stocks are AbbVie Inc., AT&T Inc., Boeing Co., BB&T Corp., Carnival Corp., Coca-Cola Co., Chevron Corp., Cisco Systems, Inc., Cummins Inc., General Electric Co., JPMorgan Chase & Co., PepsiCo, Inc., Phillips 66, Pfizer Inc., Procter & Gamble Co., Qualcomm, Inc., Simon Property Group, Inc., Target Corp., United Parcel Service, Inc., Verizon Communications Inc., WEC Energy Group, Inc. and Xcel Energy, Inc.

Raymond James’ objective was to select securities included in the S&P 500 index that have dividend yields higher than the index constituents as a whole, could sustain or increase their dividend and had credit ratings considered lower medium grade or higher. Raymond James also sought to produce a basket that, based on historical experience, would be likely to suffer less price volatility than the S&P 500 components as a whole.

The notes may pay a variable coupon. Interest, if any, is payable quarterly and will equal the sum of the dividend amounts for each of the reference shares multiplied by 96.75%.

For each reference share, the dividend amount is an amount in dollars equal to (a) $1,000 divided by the applicable adjusted initial share price multiplied by (b) the applicable reference share weighting multiplied by (c) 100% of the gross cash distributions per reference share declared by the applicable reference share issuer where the date that the applicable reference share has begun trading ex-dividend occurs during the relevant interest calculation period.

For each $1,000 principal amount of notes, the payout at maturity will be $1,000 multiplied by 96.75% multiplied by the basket level percentage. Because of the 96.75% participation rate, investors will receive less than par if the basket level percentage is less than 103.36%.

For each stock, its initial share price is the average of its average intraday prices on Sept. 23, Sept. 26 and Sept. 27.

For each stock, its final share price will be the average of its closing share prices on Sept. 21, 2018, Sept. 24, 2018 and Sept. 25, 2018.

BMO Capital Markets Corp. is the agent. Raymond James is acting as a dealer and will receive a 2% fee.

The notes will settle Sept. 30.

The Cusip number is 06367TKV1.

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