The Toronto-Dominion Bank Announces New SGD 10NC5 Subordinated Tier 2 Notes at an IPG of 3.40%

The Toronto-Dominion Bank ("TD") is planning to issue SGD Tier 2 Notes at an initial price guidance (IPG) of 3.40% area. Here is our quick take on this new issue.

iFAST Research Team
iFAST Research Team28 Jul 2026 55 Views
The Toronto-Dominion Bank Announces New SGD 10NC5 Subordinated Tier 2 Notes at an IPG of 3.40%

  • The Toronto-Dominion Bank (“TD”) intends to issue new SGD Subordinated Tier 2 10NC5 notes with an initial price guidance (“IPG”) of 3.40%. The bond is expected to be issued on 5 August 2026, with a first call date on 5 August 2031 and maturity date of 5 August 2036. If uncalled, the bond will reset at the prevailing 5-year SORA-OIS plus an initial margin. Expected bond ratings are BBB+/A/A3 (S&P/Fitch/Moody's) - 2 to 3 notches below TD's own issuer-level ratings of A+/AA+/A1 respectively. Net proceeds are earmarked for the Bank's general corporate purposes.

  • Headquartered in Toronto, Ontario, TD is a Canadian multinational banking and financial services corporation, and the sixth-largest bank in North America by assets. TD serves 28.1 million clients across four key business segments: Canadian Personal & Commercial Banking and U.S. Banking (its two North America-focused retail franchises) alongside Wealth Management & Insurance and Wholesale Banking, which operate more internationally.

  • For the three months ended 30 April 2026 (2Q2026), TD generated adjusted net income of CAD 4.2 billion (+14.9% YoY), while adjusted total revenue rose 5.9% YoY to CAD 16.0 billion. On a reported basis, however, net income fell 61.8% YoY to CAD 4.3 billion and total revenue fell 31.1% YoY to CAD 15.8 billion. The comparison was distorted by a CAD 9.0 billion one-off gain from the sale of Schwab shares booked in 2Q2025.

  • TD’s adjusted non-interest expenses rose 5.5% YoY to CAD 8.3 billion, as continued spend on governance, controls, and U.S. BSA/AML remediation was partly offset by expense discipline elsewhere. With adjusted revenue growth outpacing adjusted expense growth, TD posted positive operating leverage on constant currency terms (2Q2026: 2.7%) for a fourth consecutive quarter, and the adjusted efficiency ratio (net of insurance service expenses) improved to 57.0%, from 57.6% in 2Q2025.

  • Provision for credit losses (PCL) fell 25.4% YoY to CAD 1.0 billion. While the decline was driven entirely by lower performing-book provisions, impaired PCL rose across all three lending segments (Canadian P&C, U.S. Banking, Wholesale Banking), an underlying trend worth monitoring given ongoing labour market softness in Canada.

  • TD's CET1 ratio stood at 14.3% as of quarter-end, down from 14.9% a year earlier and 14.5% in the prior quarter. This represents a buffer of approximately 330 bps at quarter end. Strong adjusted earnings net of dividends drove solid organic capital accretion during the quarter - but this was more than offset by TD's share buyback programme, which reduced CET1 by 41bps, as well as modest risk-weighted asset growth. Total loss absorbing capacity (TLAC) ratio stood at 31.1%, broadly stable YoY (2Q2025: 31.0%), above OSFI's regulatory minimum.

  • We feel that The Toronto-Dominion Bank (TD) is a fundamentally strong issuer capable of maintaining strong capitalisation and asset quality through cycles, backed by its position as one of Canada's largest and most systemically important banks.

  • As a 10NC5 structure resetting to 5Y SORA-OIS plus the initial margin if not called, TD has an economic incentive to redeem the notes at the first call date. Under OSFI’s capital rules, Tier 2 instruments are progressively amortised for regulatory capital purposes over the final five years to maturity; the notes’ first call date also falls exactly five years before maturity.

  • This is a Tier 2, Non-Viability Contingent Capital (NVCC) instrument and subject to statutory equity conversion if Canadian regulators deem TD non-viable. The 3.40% IPG represents a decent yield pickup over comparable SGD Tier 2 peers by Westpac (3.06%), Credit Agricole (3.29%), and BNP Paribas (2.98%), though these issuers generally operate in different geographies compared to TD (which focuses on Canada). It also represents a decent yield pickup over Manulife Financial’s Tier 2 bonds (2.77%), though Manulife is also slightly different as it operates outside the banking space.

  • Overall, we see the 3.40% IPG as attractively priced for investors comfortable with subordinated bank capital risk. 

Table 1: SGD Tier 2 Peer Comparison

Issuer

Issue

Credit Rating

(S&P / Fitch / Moody’s)

Ask Price

Years to Reset / Maturity

Yield to Worst
(%)

The Toronto-Dominion Bank

TD 3.400% 05Aug2036 Corp (SGD)

BBB+ / A / A3*

100.00

5.00 / 10.00

3.40%**

Aust & NZ Banking Group

ANZ 3.750% 15Nov2034 Corp (SGD)

A- / A- / A3

103.46

3.30 / 8.31

2.65%

BPCE SA

BPCEGP 4.600% 21Jan2035 Corp (SGD)

BBB / BBB+ / Baa2

105.60

3.49 / 8.49

2.90%

BNP Paribas SA

BNP 3.950% 15Apr2035 Corp (SGD)

- / A- / Baa2

103.52

3.72 / 8.72

2.94%

Westpac Banking Corp

WSTP 3.000% 19May2038 Corp (SGD)

A- / A- / A3

99.70

6.81 / 11.82

3.05%

Credit Agricole SA

ACAFP 3.300% 25May2038 Corp (SGD)

BBB+ / A- / Baa1

100.20

6.83 / 11.83

3.27%

Manulife Financial Corp

MFCCN 2.880% 04Jun2036 Corp (SGD)

A- / A- / -

100.60

4.85 / 9.86

2.75%

Data as of 28 July 2026
*Expected credit rating

**Yield is based on IPG


Disclosure: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) holds a position in ANZ 4.500% 02Dec2032 Corp (SGD), BNP 4.750% 15Feb2034 Corp (SGD), and MFCCN 4.275% 19Jun2034 Corp (SGD). The analyst who produced this report holds a NIL position in the abovementioned securities. This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity. 

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In this article

BNP 3.950% 15Apr2035 Corp (SGD)

SGD 103.517 (YTW: 2.941%)

BPCEGP 4.600% 21Jan2035 Corp (SGD)

SGD 105.600 (YTW: 2.894%)

ACAFP 3.300% 25May2038 Corp (SGD)

SGD 100.203 (YTW: 3.266%)

ANZ 3.750% 15Nov2034 Corp (SGD)

SGD 103.458 (YTW: 2.645%)

MFCCN 2.880% 04Jun2036 Corp (SGD)

SGD 100.600 (YTW: 2.746%)

WSTP 3.000% 19May2038 Corp (SGD)

SGD 99.700 (YTW: 3.036%)

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