GS Finance Corp.
$9,000,000
Callable Buffered Monthly Russell 2000® Index-Linked Range Accrual Notes due 2026
guaranteed by
The Goldman Sachs Group, Inc.
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· |
if the index return is greater than or equal to -20% (the final index level is greater than or equal to 80% of the initial index level), $1,000; or
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if the index return is less than -20% (the final index level is less than 80% of the initial index level), the sum of (i) $1,000 plus (ii) the product of (a) the sum
of the index return plus 20% times (b) $1,000. You will receive less than the face amount of your notes.
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Original issue date:
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January 31, 2019
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Original issue price:
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100% of the face amount
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Underwriting discount:
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4.4% of the face amount
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Net proceeds to the issuer:
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95.6% of the face amount
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Estimated Value of Your Notes
The estimated value of your notes at the time the terms of your notes are set on the trade date (as determined by reference to pricing models used by Goldman Sachs & Co. LLC (GS&Co.) and
taking into account our credit spreads) is equal to approximately $964 per $1,000 face amount, which is less than the original issue price. The value of your
notes at any time will reflect many factors and cannot be predicted.
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About Your Prospectus
The notes are part of the Medium-Term Notes, Series E program of GS Finance Corp. and are fully and unconditionally guaranteed by The
Goldman Sachs Group, Inc. This prospectus includes this pricing supplement and the accompanying documents listed below. This pricing supplement constitutes a supplement to the documents listed below and should be read in conjunction with
such documents:
The information in this pricing supplement supersedes any conflicting information in the documents listed above. In addition, some of the terms or features
described in the listed documents may not apply to your notes.
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Callable Buffered Monthly Russell 2000® Index-Linked Range Accrual Notes due 2026
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INVESTMENT THESIS
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For investors who want the opportunity for a potentially higher annualized interest rate than on a comparable fixed or floating rate debt security and believe that (i) the level of
the underlier on any scheduled trading day from and including the issue date (January 31, 2019) to but excluding the final interest determination date will not be less than 80% of the initial underlier level of 1,473.536, which is
1,178.8288 and (ii) the final underlier level will not decline by more than 20% relative to the initial underlier level.
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For investors who (i) are willing to bear a loss if the underlier declines by more than 20% relative to the initial underlier level and (ii) are willing to receive interest at a
rate of less than 7.2% per annum, and possibly 0% per annum, if the underlier level does not meet or exceed the underlier barrier level on each reference date.
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For investors who understand that, due to the issuer’s early redemption right, the term of their notes could be anywhere from twelve to ninety months.
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DETERMINING PAYMENT ON THE NOTES
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if the final underlier level is greater than or equal to the buffer level, 100% of the face amount; or
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·
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if the final underlier level is less than
the buffer level, the sum of (i) 100% of the face amount plus (ii) the product of (a) $1,000 times (b) the sum of the underlier return plus
the buffer amount.
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DETAILS OF THE ISSUER’S EARLY
REDEMPTION RIGHT
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· |
We may redeem the notes at 100% of their face amount, plus any accrued and unpaid interest, on any interest payment date on or after January 31, 2020.
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While we may choose to call the notes on any monthly interest payment date on or after January 31, 2020, we are more likely to call the notes if:
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the underlier level stays above the underlier barrier level
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o |
interest rates decline or do not increase; or
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o |
the issuer’s credit spreads decrease.
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KEY TERMS
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Issuer:
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GS Finance Corp.
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Guarantor:
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The Goldman Sachs Group, Inc.
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Underlier:
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The Russell 2000® Index (Bloomberg symbol, "RTY Index")
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Face Amount:
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$9,000,000 in the aggregate; each note will have a face amount equal to $1,000
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Trade Date:
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January 28, 2019
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Settlement Date:
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January 31, 2019
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Determination Date:
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July 17, 2026
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Stated Maturity Date:
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July 31, 2026
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Early Redemption Right:
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We have the right to redeem the notes, in whole but not in part, at a price equal to 100% of the face amount plus any accrued and unpaid interest to but excluding such redemption date, on each interest payment date on or after January 31, 2020
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Redemption Dates:
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The interest payment date that will fall on January 31, 2020 and each interest payment date occurring thereafter
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Interest Determination Dates:
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The tenth scheduled trading day prior to each interest payment date
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Interest Payment Dates:
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The last calendar day of each month, beginning on February 28, 2019 and ending on the stated maturity date
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Initial Underlier Level:
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1,473.536
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Final Underlier Level:
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The closing level of the underlier on the determination date
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Underlier Return:
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The quotient of (i) the final underlier level minus the initial underlier level divided by (ii) the initial underlier level, expressed as a positive or
negative percentage.
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Underlier Barrier Level:
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1,178.8288, which is 80% of the initial underlier level
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Buffer Level:
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80% of the initial underlier level
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Buffer Amount:
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20%
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Day Count Convention:
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30/360 (ISDA)
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Business Day Convention:
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Following unadjusted
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Accrued Interest Factor:
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Calculated in accordance with the day count convention with respect to each period from and including each interest payment date (or the original issue date,
in the case of the first interest payment date) to but excluding the next succeeding interest payment date
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CUSIP/ISIN:
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40056ER26/ US40056ER265
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HYPOTHETICAL INTEREST PAYMENTS
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Interest Payments: Interest will accrue at the full 7.2% per annum.
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Call Feature: The issuer is more likely to call the notes prior to maturity.
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Payment at Maturity: Since the final underlier level is greater than the buffer level, the investor
will receive the face amount at maturity.
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Interest Payments: The interest rate will be 7.2% per annum only during the periods when the closing
underlier level is always greater than or equal to the underlier barrier.
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Call Feature: The issuer is somewhat more likely to call the notes prior to maturity when the underlier
level is greater than the underlier barrier level.
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Payment at Maturity: Since the final underlier level is greater than the buffer level, the investor
will receive the face amount at maturity.
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Interest Payments: The interest rate will be 7.2% per annum only during the periods when the closing
underlier level is always greater than or equal to the underlier barrier level.
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Call Feature: The issuer is somewhat less likely to call the notes prior to maturity when the underlier
level is less than the underlier barrier level.
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·
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Payment at Maturity: Since the final underlier level is less than the buffer
level, the investor will lose a significant portion of their investment.
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Interest Payments: The monthly interest payments are mostly zero.
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Call Feature: The issuer is not likely to call the notes prior to maturity.
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Payment at Maturity: Since the final underlier level is less than the buffer level, the investor will
lose a significant portion of their investment.
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RISKS
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We refer to the notes we are offering by this pricing supplement as the “offered notes” or the “notes”. Each of
the offered notes has the terms described below. Please note that in this pricing supplement, references to “GS Finance Corp.”, “we”, “our” and “us” mean only GS Finance Corp. and do not include its subsidiaries or affiliates,
references to “The Goldman Sachs Group, Inc.”, our parent company, mean only The Goldman Sachs Group, Inc. and do not include its subsidiaries or affiliates and references to “Goldman Sachs” mean The Goldman Sachs Group, Inc. together
with its consolidated subsidiaries and affiliates, including us. Also, references to the “accompanying prospectus” mean the accompanying prospectus, dated July 10, 2017, references to the “accompanying prospectus supplement” mean the
accompanying prospectus supplement, dated July 10, 2017, for Medium-Term Notes, Series E, references to the “accompanying general terms supplement no. 1,734” mean the accompanying general terms supplement no. 1,734, dated July 10, 2017,
and references to the “accompanying product supplement no. 1,754” mean the accompanying product supplement no. 1,754, dated July 10, 2017, in each case of GS Finance Corp. and The Goldman Sachs Group, Inc. The notes will be issued under
the senior debt indenture, dated as of October 10, 2008, as supplemented by the First Supplemental Indenture, dated as of February 20, 2015, each among us, as issuer, The Goldman Sachs Group, Inc., as guarantor, and The Bank of New York
Mellon, as trustee. This indenture, as so supplemented and as further supplemented thereafter, is referred to as the “GSFC 2008 indenture” in the accompanying prospectus supplement.
This section is meant as a summary and should be read in conjunction with the section entitled “General Terms of the Callable Range Accrual Notes” on page
S-25 of the accompanying product supplement no. 1,754 and “Supplemental Terms of the Notes” on page S-16 of the accompanying general terms supplement no. 1,734. Please note that certain features, as noted below, described in the
accompanying product supplement no. 1,754 and general terms supplement no. 1,734 are not applicable to the notes. This pricing supplement supersedes any conflicting provisions of the accompanying product supplement no. 1,754 or the
accompanying general terms supplement no. 1,734.
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type of notes: notes linked to an underlier
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redemption right or price dependent redemption right: yes, as described below
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reference rate: not applicable
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rate trigger range: not applicable
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trigger buffer level: not applicable
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buffer level: yes, as described below
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if the final underlier level is greater than or equal to the buffer level, $1,000; or
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if the final underlier level is less than the buffer level, the sum of (1) $1,000 plus (2) the product
of (i) $1,000 times (ii) the buffer rate times (iii) the sum of the underlier return plus the buffer amount
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[360 × (Y2 – Y1)] + [30 × (M2
– M1)] + (D2 –D1)
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360
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February or March Interest Payment Date*
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Applicable Accrued Interest Factor for the
Interest Payment Date
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2/28/2019
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28 / 360
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3/31/2019
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33 / 360
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2/29/2020
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29 / 360
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3/31/2020
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32 / 360
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2/28/2021
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28 / 360
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3/31/2021
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33 / 360
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2/28/2022
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28 / 360
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3/31/2022
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33 / 360
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2/28/2023
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28 / 360
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3/31/2023
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33 / 360
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2/29/2024
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29 / 360
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3/31/2024
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32 / 360
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2/28/2025
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28 / 360
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3/31/2025
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33 / 360
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2/28/2026
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28 / 360
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3/31/2026
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33 / 360
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*The table includes only the applicable accrued interest factor for the interest payment dates falling on the last calendar day of each February and 30th day
of each March
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Key Terms and Assumptions
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Face amount
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$1,000
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Buffer level
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80% of the initial underlier level
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Buffer amount
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20%
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Buffer rate
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100%
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Underlier barrier level
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80% of the initial underlier level
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Interest factor
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7.2%
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The day count convention calculation results in an accrued interest factor of approximately 0.08333 (the accrued interest factor for an
interest accrual period may be less than or greater than approximately 0.08333)
The notes are not called
Neither a market disruption event nor a non-trading day occurs on the originally scheduled determination date
No market disruption event or non-trading day occurs on any reference date
No change in or affecting any of the underlier stocks or the method by which the underlier sponsor calculates the underlier
Notes purchased on original issue date at the face amount and held to the stated maturity date
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N* (A)
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Assumed number of eligible trading days in an interest period (B)
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Fraction (A/B) x 7.2%
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Amount of interest to be paid on the related interest
payment date (using 30/360 (ISDA)
convention) |
0
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20
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0.00000000
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0.00%
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5
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20
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0.01800000
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0.15%
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10
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20
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0.03600000
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0.30%
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15
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20
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0.05400000
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0.45%
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20
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20
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0.07200000
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0.60%
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Hypothetical Final Underlier Level
(as Percentage of Initial Underlier Level)
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Hypothetical Cash Settlement Amount
(as Percentage of Face Amount)*
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175.000%
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100.000%
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150.000%
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100.000%
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125.000%
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100.000%
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110.000%
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100.000%
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100.000%
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100.000%
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95.000%
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100.000%
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90.000%
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100.000%
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80.000%
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100.000%
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60.000%
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80.000%
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50.000%
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70.000%
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25.000%
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45.000%
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0.000%
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20.000%
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We cannot predict the actual closing level of the underlier on any day, the final underlier level or what the market value of your notes
will be on any particular day, nor can we predict the relationship among the closing level of the underlier and the market value of your notes at any time prior to the stated maturity date. The actual interest payment, if any, that a
holder of the notes will receive at each interest payment date, the actual amount that you will receive at maturity and the rate of return on the offered notes will depend on the actual closing levels of the underlier and the actual
final underlier level determined by the calculation agent as described above. Moreover, the assumptions on which the hypothetical examples are based may turn out to be inaccurate. Consequently, the interest amount to be paid in respect
of your notes, if any, and the cash amount to be paid in respect of your notes on the stated maturity date may be very different from the information reflected in the tables and examples above.
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An investment in your notes is subject to the risks described below, as well as the risks and considerations described
in the accompanying prospectus, in the accompanying prospectus supplement, under “Additional Risk Factors Specific to the Notes” in the accompanying general terms supplement no. 1,734 and under “Additional Risk Factors Specific to the
Underlier-Linked Notes” in the accompanying product supplement no. 1,754. You should carefully review these risks and considerations as well as the terms of the notes described herein and in the accompanying prospectus, the accompanying
prospectus supplement, the accompanying general terms supplement no. 1,734 and the accompanying product supplement no. 1,754. Your notes are a riskier investment than ordinary debt securities. Also, your notes are not equivalent to
investing directly in the underlier stocks, i.e., the stocks comprising the underlier to which your notes are linked. You should carefully consider whether the offered notes are suited to your particular circumstances.
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Page
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PS-5
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PS-10
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PS-13
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PS-17
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PS-20
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Product Supplement No. 1,754 dated July 10, 2017
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Summary Information
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S-1
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Hypothetical Returns on the Callable Range Accrual Notes
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S-7
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Additional Risk Factors Specific to the Callable Range Accrual Notes
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S-20
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General Terms of the Callable Range Accrual Notes
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S-25
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Use of Proceeds
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S-30
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Hedging
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S-30
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Supplemental Discussion of Federal Income Tax Consequences
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S-31
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Employee Retirement Income Security Act
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S-38
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Supplemental Plan of Distribution
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S-39
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Conflicts of Interest
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S-42
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General Terms Supplement No. 1,734 dated July 10, 2017
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Additional Risk Factors Specific to the Notes
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S-1
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Supplemental Terms of the Notes
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S-16
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The Underliers
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S-36
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S&P 500® Index
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S-40
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MSCI Indices
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S-46
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Hang Seng China Enterprises Index
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S-55
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Russell 2000® Index
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S-61
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FTSE® 100 Index
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S-69
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EURO STOXX 50® Index
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S-75
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TOPIX
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S-82
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The Dow Jones Industrial Average®
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S-87
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The iShares® MSCI Emerging Markets ETF
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S-91
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Use of Proceeds
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S-94
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Hedging
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S-94
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Employee Retirement Income Security Act
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S-95
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Supplemental Plan of Distribution
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S-96
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Conflicts of Interest
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S-98
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Prospectus Supplement dated July 10, 2017
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Use of Proceeds
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S-2
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Description of Notes We May Offer
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S-3
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Considerations Relating to Indexed Notes
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S-15
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United States Taxation
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S-18
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Employee Retirement Income Security Act
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S-19
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Supplemental Plan of Distribution
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S-20
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Validity of the Notes and Guarantees
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S-21
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Prospectus dated July 10, 2017
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Available Information
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2
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Prospectus Summary
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4
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Risks Relating to Regulatory Resolution Strategies and Long-Term Debt Requirements
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8
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Use of Proceeds
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11
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Description of Debt Securities We May Offer
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12
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Description of Warrants We May Offer
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45
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Description of Units We May Offer
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60
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GS Finance Corp.
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65
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Legal Ownership and Book-Entry Issuance
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67
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Considerations Relating to Floating Rate Debt Securities
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72
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Considerations Relating to Indexed Securities
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73
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Considerations Relating to Securities Denominated or Payable in or Linked to a Non-U.S. Dollar Currency
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74
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United States Taxation
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77
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Plan of Distribution
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92
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Conflicts of Interest
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94
|
Employee Retirement Income Security Act
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95
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Validity of the Securities and Guarantees
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95
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Experts
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96
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Review of Unaudited Condensed Consolidated Financial Statements by Independent Registered Public Accounting Firm
|
96
|
Cautionary Statement Pursuant to the Private Securities Litigation Reform Act of 1995
|
96
|