Royal Bank of Canada and TD Bank Announce New Debt Offerings
Toronto, Friday, 11 July 2025.
Royal Bank of Canada and TD Bank recently announced JPY 26 billion and AUD 30 million debt offerings to bolster their capital amid a challenging economic and regulatory landscape.
Royal Bank of Canada Unveils JPY 26 Billion Debt Offering
On July 11, 2025, the Royal Bank of Canada (TSX: RY, NYSE: RY) announced a private placement offering of JPY 26 billion in non-viability contingent capital (NVCC) subordinated debentures. The offering will occur under its European Programme for the Issuance of Securities, bearing a fixed interest rate of 1.963% per annum until July 17, 2030, after which it will switch to the 5-year Tokyo Overnight Average Rate (TONA) mid-swap rate plus 1.02% until maturity on July 17, 2035. RBC Capital Markets and Nomura International are acting as lead managers in this transaction [1][2][3].
Details and Strategic Implications for RBC
The bank may redeem the notes on or after July 17, 2030, subject to prior approval from the Office of the Superintendent of Financial Institutions (OSFI), in whole but not in part, at par plus accrued and unpaid interest. This action requires providing registered holders with 30 to 60 days’ notice [1]. The issuance, expected to close on July 17, 2025, will potentially bolster Royal Bank of Canada’s Tier 2 capital, fulfilling regulatory goals and general business purposes, thus strengthening its balance sheet under evolving economic conditions [3][4].
TD Bank Group’s AUD 30 Million Offering
Simultaneously, the Toronto-Dominion Bank (TSX: TD) announced the pricing of a private placement offering of AUD 30 million Fixed-to-Floating Rate Subordinated Notes. These notes, also categorized as NVCC, will bear a fixed interest rate of 5.93% per annum until July 23, 2035, after which the interest will be adjusted to a floating rate based on the 3-month BBSW rate yield plus a margin of 1.500% [5].
Strategic Objectives of TD Bank’s New Offering
The fixed-to-floating rate feature introduces flexibility in interest cost management, aligning with the bank’s strategic focus on capital optimization. The notes, expected to qualify as Tier 2 capital for regulatory compliance, will be managed exclusively by the Toronto-Dominion Bank’s London Branch as the sole manager. The issuance proceeds are aimed at general corporate purposes, potentially including refinancing existing liabilities [5].