Filed Pursuant to Rule 424(b)(2)
Registration Statement No. 333-198735
The information in this preliminary pricing
supplement is not complete and may be changed. This preliminary pricing supplement is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Subject to Completion. Dated July 31, 2015
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The Goldman Sachs Group, Inc.
Callable Step-Up Fixed Rate Notes due 2028 |
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We will pay you interest semi-annually on your notes at a rate of 3.25% per
annum from and including August , 2015 to but excluding February , 2022. We will pay you interest semi-annually on your notes at a rate of 5.00% per annum from and including February
, 2022 to but excluding February , 2026. We will pay you interest semi-annually on your notes at a rate of 6.00% per annum from and including February , 2026 to but excluding
the stated maturity date (February , 2028). Interest will be paid on each February and August . The first such payment will be made on February , 2016.
In addition, we may redeem the notes at our option, in whole but not in part, on each February ,
May , August and November on or after August , 2016, upon five business days prior notice, at a redemption price equal to 100% of
the outstanding principal amount plus accrued and unpaid interest to but excluding the redemption date. Although the interest rate will step up during the life of your notes, you may not benefit from such increase in the interest rate if your notes
are redeemed prior to the stated maturity date.
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Per Note |
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Total |
Initial price to public* |
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% |
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$ |
Underwriting discount* |
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% |
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$ |
Proceeds, before expenses, to The Goldman Sachs Group, Inc. |
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% |
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$ |
* |
The initial price to public will vary between % and 100% for certain investors; see Supplemental Plan of
Distribution on page PS-6. |
The initial price to
public set forth above does not include accrued interest, if any. Interest on the notes will accrue from August , 2015 and must be paid by the purchaser if the notes are delivered after
August , 2015. In addition to offers and sales at the initial price to public, the underwriters may offer the notes from time to time for sale in one or more transactions at market prices prevailing at the time of sale,
at prices related to market prices or at negotiated prices.
The return (whether positive or negative) on your investment in notes will
depend in part on the issue price you pay for such notes.
Neither the Securities and Exchange Commission nor any other regulatory
body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
The notes are not bank deposits and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency, nor are they obligations of, or guaranteed by, a bank.
Goldman Sachs may use this prospectus in the initial sale of the notes. In addition, Goldman, Sachs & Co. or any other affiliate of Goldman
Sachs may use this prospectus in a market-making transaction in the notes after their initial sale. Unless Goldman Sachs or its agent informs the purchaser otherwise in the confirmation of sale, this prospectus is being used in a market-making
transaction.
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Goldman, Sachs & Co. |
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Incapital LLC |
Pricing Supplement No. dated
, 2015.
About Your Prospectus
The notes are part of the Medium-Term Notes, Series D program of 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.
SPECIFIC TERMS OF THE NOTES
Please note that in this section entitled Specific Terms of the Notes, references to The
Goldman Sachs Group, Inc., we, our and us mean only The Goldman Sachs Group, Inc. and do not include any of its consolidated subsidiaries. Also, in this section, references to holders mean The
Depository Trust Company (DTC) or its nominee and not indirect owners who own beneficial interests in notes through participants in DTC. Please review the special considerations that apply to indirect owners in the accompanying prospectus, under
Legal Ownership and Book-Entry Issuance.
This pricing supplement no. dated
, 2015 (pricing supplement) and the accompanying prospectus dated September 15, 2014 (accompanying prospectus), relating to the notes, should be
read together. Because the notes are part of a series of our debt securities called Medium-Term Notes, Series D, this pricing supplement and the accompanying prospectus should also be read with the accompanying prospectus supplement, dated September
15, 2014 (accompanying prospectus supplement). Terms used but not defined in this pricing supplement have the meanings given them in the accompanying prospectus or accompanying prospectus supplement, unless the context requires otherwise.
The notes are part of a separate series of our debt securities under our Medium-Term Notes, Series D program governed by our Senior
Debt Indenture, dated as of July 16, 2008, between us and The Bank of New York Mellon, as trustee. This pricing supplement summarizes specific terms that will apply to your notes. The terms of the notes described here supplement those described
in the accompanying prospectus supplement and accompanying prospectus and, if the terms described here are inconsistent with those described there, the terms described here are controlling.
Terms of the Callable Step-Up Fixed Rate Notes due 2028
Issuer: The Goldman Sachs Group, Inc.
Principal amount: $
Specified currency: U.S. dollars ($)
Type of Notes: Fixed rate notes (notes)
Denominations: $1,000 and integral multiples of $1,000 in excess thereof
Trade date:
Original issue date: August , 2015
Stated maturity date: February , 2028
Interest rate: 3.25% per annum from and including August , 2015 to but excluding February , 2022; 5.00% per annum from and including
February , 2022 to but excluding February , 2026; 6.0% per annum from and including February , 2026 to but excluding February , 2028
Supplemental discussion of U.S. federal income tax consequences: It is the opinion of Sidley Austin LLP that interest on a note
will be taxable to a U.S. holder as ordinary interest income at the time it accrues or is received in accordance with the U.S. holders normal method of accounting for tax purposes (regardless of whether we call the notes). Upon the disposition
of a note by sale, exchange, redemption or retirement (i.e., if we exercise our right to call the notes or otherwise) or other disposition, a U.S. holder will generally recognize capital
gain or loss equal to the difference, if any, between (i) the amount realized on the disposition (other than amounts attributable to accrued but unpaid interest, which would be treated as
such) and (ii) the U.S. holders adjusted tax basis in the note.
Interest payment dates:
February and August of each year, commencing on February , 2016 and ending on the stated maturity date
Regular record dates: for interest due on an interest payment date, the day immediately prior to the day on which payment is to be made (as such payment day may be adjusted under the applicable business day
convention specified below)
Day count convention: 30/360
Business day: New York
Business day convention: following unadjusted
Redemption at option of issuer before stated maturity: We may redeem the notes at our option, in whole but not in part, on each
February , May , August and November on or after August , 2016, upon five business days prior notice,
at a redemption price equal to 100% of the outstanding principal amount plus accrued and unpaid interest to but excluding the redemption date
Listing: None
ERISA: as described under
Employee Retirement Income Security Act on page 118 of the accompanying prospectus
PS-2
CUSIP no.: 38148TBL2
ISIN no.: US38148TBL26
Form of notes: Your notes will be issued in book-entry form and represented by a
master global note. You should read the section Legal Ownership and Book-Entry Issuance in the accompanying prospectus for more information about notes issued in book-entry form
Defeasance applies as follows:
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full defeasance i.e., our right to be relieved of all our obligations on the note by placing funds in trust for the holder: yes
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covenant defeasance i.e., our right to be relieved of specified provisions of the note by placing funds in trust for the holder: yes
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FDIC: The notes are not bank deposits and are not insured by the Federal Deposit Insurance Corporation or any
other governmental agency, nor are they obligations of, or guaranteed by, a bank
Calculation Agent: Goldman, Sachs & Co.
Foreign Account Tax Compliance Act (FATCA) Withholding May Apply to Payments on Your Notes, Including as a Result of the Failure of the Bank or Broker Through
Which You Hold the Notes to Provide Information to Tax Authorities:
Please see the discussion under United States Taxation
Taxation of Debt Securities Foreign Account Tax Compliance Act (FATCA) Withholding in the accompanying prospectus for a description of the applicability of FATCA to payments made on your notes.
PS-3
ADDITIONAL INFORMATION ABOUT THE NOTES
Book-Entry System
We
will issue the notes as a master global note registered in the name of DTC, or its nominee. The sale of the notes will settle in immediately available funds through DTC. You will not be permitted to withdraw the notes from DTC except in the limited
situations described in the accompanying prospectus under Legal Ownership and Book-Entry Issuance What Is a Global Security? Holders Option to Obtain a Non-Global Security; Special
Situations When a Global Security Will Be Terminated. Investors may hold interests in a master global note through organizations that participate, directly or indirectly, in the DTC system.
In addition to this pricing supplement, the following provisions are hereby incorporated into the global master note: the description of the 30/360
day count convention appearing under Description of Debt Securities We May Offer Calculations of Interest on Debt Securities Interest Rates and Interest in the accompanying prospectus, the description of New York business
day appearing under Description of Debt Securities We May Offer Calculations of Interest on Debt Securities Business Days in the accompanying prospectus, the description of the following unadjusted business day convention
appearing under Description of Debt Securities We May Offer Calculations of Interest on Debt Securities Business Day Conventions in the accompanying prospectus and the section Description of Debt Securities We May
Offer Defeasance and Covenant Defeasance in the accompanying prospectus.
When We Can Redeem the Notes
We will be permitted to redeem the notes at our option before their stated maturity, as described below. The notes will not be
entitled to the benefit of any sinking fund that is, we will not deposit money on a regular basis into any separate custodial account to repay your note. In addition, you will not be entitled to require us to buy your note from you before its
stated maturity.
We will have the right to redeem the notes at our option, in whole but not in part, on each
February , May , August and November on or after August , 2016, at a redemption price equal to 100% of the
outstanding principal amount plus accrued and unpaid interest to but excluding the redemption date. We will provide not less than five business days prior notice in the manner described under Description of Debt Securities We May
Offer Notices in the attached prospectus. If the redemption notice is given and funds deposited as required, then interest will cease to accrue on and after the redemption date on the notes. If any redemption date is not a business
day, we will pay the redemption price on the next business day without any interest or other payment due to the delay.
What are
the Tax Consequences of the Notes
You should carefully consider, among other things, the matters set forth under United
States Taxation in the accompanying prospectus supplement and the accompanying prospectus. The following discussion summarizes certain of the material U.S. federal income tax consequences of the purchase, beneficial ownership, and disposition
of each of the notes. This summary supplements the section United States Taxation in the accompanying prospectus supplement and the accompanying prospectus and is subject to the limitations and exceptions set forth therein.
As of the original issue date, the notes should not be treated as issued with original issue discount (OID) despite the
fact that the interest rate on the notes is scheduled to step-up over the term of the notes because Treasury regulations generally deem an issuer to exercise a call option in a manner that minimizes the yield on the debt instrument for purposes of
determining whether a debt instrument is issued with OID. The yield on the notes would be minimized if we call the notes immediately before the increase in the interest rate on February , 2022 and therefore the notes
should be treated as maturing on such date for OID purposes. This assumption is made solely for purposes of determining whether the notes are issued with OID for U.S. federal income tax purposes, and is not an indication of our intention to call or
not to call the notes at any time. If we do not call the notes prior to the increase in the interest rate then, solely for OID purposes, the notes will be deemed to be reissued at their adjusted issue price on February ,
2022. This deemed issuance should not give rise to taxable gain or loss to holders. The same analysis would apply to the increase in the interest rate on February , 2026.
Under this approach, interest on a note will be taxable to a U.S. holder as ordinary interest income at the time it accrues or is received in
accordance with the U.S. holders normal method of accounting for tax purposes (regardless of whether we call the notes).
PS-4
Upon the disposition of a note by sale, exchange, redemption or retirement (i.e., if we exercise our
right to call the notes or otherwise) or other disposition, a U.S. holder will generally recognize capital gain or loss equal to the difference, if any, between (i) the amount realized on the disposition (other than amounts attributable to
accrued but unpaid interest, which would be treated as such) and (ii) the U.S. holders adjusted tax basis in the note. A U.S. holders adjusted tax basis in a note generally will equal the cost of the note (net of accrued interest)
to the U.S. holder. The deductibility of capital losses is subject to significant limitations.
Foreign
Account Tax Compliance Act (FATCA) Withholding. Pursuant to Treasury regulations, Foreign Account Tax Compliance Act (FATCA)
withholding (as described in United States Taxation Taxation of Debt Securities Foreign Account Tax Compliance Act (FATCA) Withholding in the accompanying prospectus) will generally apply to obligations that are
issued on or after July 1, 2014; therefore, the notes will generally be subject to FATCA withholding. However, according to final Treasury regulations, the withholding tax described above will not apply to payments of gross proceeds from the sale,
exchange, redemption or other disposition of the notes made before January 1, 2017.
PS-5
SUPPLEMENTAL PLAN OF DISTRIBUTION
The Goldman Sachs Group, Inc. and the underwriters for this offering named below have entered into a distribution agreement with respect to the
notes. Subject to certain conditions, each underwriter named below has severally agreed to purchase the principal amount of notes indicated in the following table.
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Underwriters |
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Principal Amount of Notes |
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Goldman, Sachs & Co. |
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Incapital LLC |
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Total |
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Notes sold by the underwriters to the public will initially be offered at the initial price to public set forth on
the cover of this pricing supplement. The underwriters intend to purchase the notes from The Goldman Sachs Group, Inc. at a purchase price equal to the initial price to public less a discount of % of
the principal amount of the notes. Any notes sold by the underwriters to securities dealers may be sold at a discount from the initial price to public of up to % of the principal amount of the notes.
The initial price to public for notes purchased by certain fee-based advisory accounts will vary between % and 100% of the face amount of the notes. Any sale of a note to a
fee-based advisory account at an initial price to public below 100% of the face amount will reduce the underwriting discount specified on the cover of this pricing supplement with respect to such note. The initial price to public paid by any
fee-based advisory account will be reduced by the amount of any fees assessed by the securities dealer or dealers involved in the sale of the notes to such advisory account, but not by more than
% of the face amount of the notes. If all of the offered notes are not sold at the initial price to public, the underwriters may change the offering price and the other selling
terms. In addition to offers and sales at the initial price to public, the underwriters may offer the notes from time to time for sale in one or more transactions at market prices prevailing at the time of sale, at prices related to market prices or
at negotiated prices.
Please note that the information about the initial price to public and net proceeds to The Goldman Sachs Group,
Inc. on the front cover page relates only to the initial sale of the notes. If you have purchased a note in a market-making transaction by Goldman, Sachs & Co. or any other affiliate of The Goldman Sachs Group, Inc. after the initial sale,
information about the price and date of sale to you will be provided in a separate confirmation of sale.
Each underwriter has
represented and agreed that it will not offer or sell the notes in the United States or to United States persons except if such offers or sales are made by or through FINRA member broker-dealers registered with the U.S. Securities and Exchange
Commission.
The Goldman Sachs Group, Inc. estimates that its share of the total offering expenses, excluding underwriting discounts and
commissions, whether paid to Goldman, Sachs & Co. or any other underwriter, will be approximately $ .
We expect to deliver the notes against payment therefor in New York, New York on August , 2015, which is
expected to be the third scheduled business day following the date of this pricing supplement and of the pricing of the notes.
The
notes are a new issue of securities with no established trading market. The Goldman Sachs Group, Inc. has been advised by Goldman, Sachs & Co. and Incapital LLC that they may make a market in the notes. Goldman, Sachs & Co. and
Incapital LLC are not obligated to do so and may discontinue market-making at any time without notice. No assurance can be given as to the liquidity of the trading market for the notes.
The Goldman Sachs Group, Inc. has agreed to indemnify the several underwriters against certain liabilities, including liabilities under the
Securities Act of 1933.
Certain of the underwriters and their affiliates have in the past provided, and
may in the future from time to time provide, investment banking and general financing and banking services to The Goldman Sachs Group, Inc. and its affiliates, for which they have in the past received, and may in the future receive, customary fees.
The Goldman Sachs Group, Inc. and its affiliates have in the past provided, and may in the future from time to time provide, similar services to the underwriters and their affiliates on customary terms and for customary fees. Goldman,
Sachs & Co., one of the underwriters, is an affiliate of The Goldman Sachs Group, Inc. Please see Plan of DistributionConflicts of Interest on page 117 of the accompanying prospectus.
Conflicts of Interest
GS&Co. is an affiliate of The Goldman Sachs Group, Inc. and, as such, will have a conflict of interest in this offering of notes
within the meaning of Financial Industry Regulatory Authority, Inc. (FINRA) Rule 5121. Consequently, this offering of notes will be conducted in compliance with the provisions of FINRA Rule 5121. GS&Co. will not be permitted to sell
notes in this offering to an account over which it exercises discretionary authority without the prior specific written approval of the account holder.
PS-6
We have not authorized anyone to provide any
information or to make any representations other than those contained or incorporated by reference in this pricing supplement, the accompanying prospectus supplement or the accompanying prospectus. We take no responsibility for, and can provide no
assurance as to the reliability of, any other information that others may give you. This pricing supplement, the accompanying prospectus supplement and the accompanying prospectus is an offer to sell only the notes offered hereby, but only under
circumstances and in jurisdictions where it is lawful to do so. The information contained in this pricing supplement, the accompanying prospectus supplement and the accompanying prospectus is current only as of the respective dates of such
documents.
TABLE OF CONTENTS
Pricing Supplement
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Page |
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Specific Terms of the Notes |
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PS-2 |
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Additional Information About the Notes |
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PS-4 |
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Supplemental Plan of Distribution |
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PS-6 |
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Conflicts of Interest |
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PS-6 |
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Prospectus Supplement dated September 15, 2014 |
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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-19 |
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United States Taxation |
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S-22 |
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Employee Retirement Income Security Act |
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S-23 |
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Supplemental Plan of Distribution |
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S-24 |
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Validity of the Notes |
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S-26 |
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Prospectus dated September 15, 2014 |
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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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Use of Proceeds |
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8 |
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Description of Debt Securities We May Offer |
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9 |
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Description of Warrants We May Offer |
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39 |
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Description of Purchase Contracts We May Offer |
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56 |
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Description of Units We May Offer |
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61 |
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Description of Preferred Stock We May Offer |
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67 |
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Description of Capital Stock of The Goldman Sachs Group, Inc. |
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75 |
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Legal Ownership and Book-Entry Issuance |
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80 |
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Considerations Relating to Floating Rate Debt Securities |
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85 |
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Considerations Relating to Indexed Securities |
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87 |
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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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88 |
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United States Taxation |
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91 |
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Plan of Distribution |
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114 |
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Conflicts of Interest |
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117 |
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Employee Retirement Income Security Act |
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118 |
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Validity of the Securities |
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119 |
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Experts |
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119 |
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Review of Unaudited Condensed Consolidated Financial Statements by Independent Registered Public Accounting Firm |
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120 |
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Cautionary Statement Pursuant to the Private Securities Litigation Reform Act of 1995 |
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120 |
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$
The Goldman Sachs Group, Inc.
Callable Step-Up Fixed Rate
Notes due 2028
Goldman, Sachs & Co.
Incapital LLC
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