RBC plans contingent income autocallables linked to PepsiCo, Starbucks

By Toni Weeks

San Luis Obispo, Calif., July 18 - Royal Bank of Canada plans to price contingent income autocallable securities due July 2016 linked to the common stocks of PepsiCo, Inc. and Starbucks Corp., according to an FWP filing with the Securities and Exchange Commission.

If both PepsiCo and Starbucks shares close at or above their downside threshold levels - 75% of the respective initial share prices - on a quarterly determination date, investors will receive a contingent payment of $0.23 for each $10.00 note. Otherwise, no contingent payment will be made for that quarter. The contingent payment is equivalent to 9.2% per year.

If the closing share price of each underlying stock is greater than or equal to its initial share price on any of the first 11 quarterly determination dates, the notes will be automatically redeemed at par plus the contingent payment.

If the notes are not called and the final share price of each underlying stock is greater than or equal to its downside threshold level, the payout at maturity will be par plus the contingent payment. If the final price of either stock is less than its downside threshold level, the payout will be a number of shares of the worst-performing stock equal to $10.00 divided by the initial share price or, at the issuer's option, an amount in cash equal to the value of those shares.

The notes (Cusip: 78008Y889) are expected to price July 23 and settle three business days later.

RBC Capital Markets, LLC is the agent. Distribution is through Morgan Stanley Smith Barney LLC.

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