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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Bank of America Corporation | NYSE:BAC | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.23 | 0.62% | 37.48 | 4,528 | 11:01:29 |
Subject to Completion
Preliminary Term Sheet dated June 8, 2017
|
Filed Pursuant to Rule 424(b)(2)
Registration Statement No. 333-213265 (To Prospectus dated November 4, 2016, Prospectus Supplement dated November 4, 2016 and Product Supplement EQUITY INDICES SUN-1 dated November 28, 2016) |
Per Unit
|
Total
|
|
Public offering price
(1)
……………………
………..
|
$
10.00
|
$
|
Underwriting discount
(1)
…………………
………...
|
$
0.25
|
$
|
Proceeds, before expenses, to
BofA
Finance
.....
|
$
9.75
|
$
|
(1)
|
For any purchase of 500,000 units or more in a single transaction by an individual investor or in combined transactions with the investor
’
s household in this offering, the public offering price and the underwriting discount will be $9.95 per unit and $0.20 per unit, respectively.
See Supplement to the Plan of Distribution; Conflicts of Interest below.
|
Are Not FDIC Insured
|
Are Not Bank Guaranteed
|
May Lose Value
|
Market-Linked Step Up Notes
Linked to a Global Equity Basket, due June , 2021 |
|
Terms of the Notes
|
Redemption Amount
Determination
|
|
Issuer:
|
BofA Finance LLC (BofA Finance)
|
On the maturity date, you will receive a cash payment per unit determined as follows:
|
Guarantor:
|
Bank of America Corporation (BAC)
|
|
Principal Amount
:
|
$10.00 per unit
|
|
Term:
|
Approximately four years
|
|
Market Measure:
|
A global equity basket comprised of
the
S&P 500
®
Index (
Bloomberg
symbol:
SPX
) and
the
EURO STOXX 50
®
Index (
Bloomberg
symbol:
SX5E
). Each Basket Component is a price return index.
|
|
Starting Value:
|
The Starting Value will be set to 100.00 on the pricing date.
|
|
Ending Value:
|
The value of the Market Measure on the scheduled calculation day. The calculation day is subject to postponement in the event of Market Disruption Events, as described beginning on page PS-
21
of product supplement EQUITY INDICES SUN-1.
|
|
Step Up Value:
|
[126% to 132%] of the Starting Value. The actual Step Up Value will be determined on the pricing date.
|
|
Step Up Payment:
|
[$2.60 to $3.20] per unit, which represents a return of [26% to 32%] over the principal amount. The actual Step Up Payment will be determined on the pricing date.
|
|
Threshold Value:
|
95
% of the Starting Value.
|
|
Calculation Day
:
|
Approximately the fifth scheduled Market Measure Business Day immediately preceding the maturity date.
|
|
Fees and Charges
:
|
The underwriting discount of $0.25 per unit listed on the cover page and the hedging related charge of $0.075 per unit described in Structuring the Notes on page TS-
18
.
|
|
Calculation Agent
:
|
Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S), an affiliate of BofA Finance.
|
Market-Linked Step Up Notes
|
TS-
2
|
Market-Linked Step Up Notes
Linked to a Global Equity Basket, due June , 2021 |
|
■
|
Product supplement EQUITY INDICES SUN-1 dated November 28, 2016:
http://www.sec.gov/Archives/edgar/data/70858/000119312516778291/d301449d424b5.htm |
■
|
Series A MTN prospectus supplement dated November 4, 2016 and prospectus dated November 4, 2016:
http://www.sec.gov/Archives/edgar/data/70858/000119312516760144/d266649d424b3.htm |
Market-Linked Step Up Notes
|
TS-
3
|
Market-Linked Step Up Notes
Linked to a Global Equity Basket, due June , 2021 |
|
Market-Linked Step Up Notes
|
This graph reflects the returns on the notes, based on a Threshold Value of 95% of the Starting Value, a Step Up Payment of $2.90 per unit (the midpoint of the Step Up Payment range of [$2.60 to $3.20]) and a Step Up Value of 129% of the Starting Value (the midpoint of the Step Up Value range of [126% to 132%]). The green line reflects the returns on the notes, while the dotted gray line reflects the returns of a direct investment in the stocks included in the Basket Components, excluding dividends.
This graph has been prepared for purposes of illustration only.
|
Ending Value
|
Percentage Change from the Starting Value to the Ending Value
|
Redemption Amount per Unit
|
Total Rate of Return on the Notes
|
0.00
|
-100.00%
|
$0.50
|
-95.00%
|
50.00
|
-50.00%
|
$5.50
|
-45.00%
|
80.00
|
-20.00%
|
$8.50
|
-15.00%
|
85.00
|
-15.00%
|
$9.00
|
-10.00%
|
90.00
|
-10.00%
|
$9.50
|
-5.00%
|
94.00
|
-6.00%
|
$9.90
|
-1.00%
|
95.00
(1)
|
-5.00%
|
$10.00
|
0.00%
|
96.00
|
-4.00%
|
$10.00
|
0.00%
|
97.00
|
-3.00%
|
$10.00
|
0.00%
|
100.00
(2)
|
0.00%
|
$12.90
(3)
|
29.00%
|
102.00
|
2.00%
|
$12.90
|
29.00%
|
105.00
|
5.00%
|
$12.90
|
29.00%
|
110.00
|
10.00%
|
$12.90
|
29.00%
|
120.00
|
20.00%
|
$12.90
|
29.00%
|
129.00
(4)
|
29.00%
|
$12.90
|
29.00%
|
130.00
|
30.00%
|
$13.00
|
30.00%
|
140.00
|
40.00%
|
$14.00
|
40.00%
|
143.00
|
43.00%
|
$14.30
|
43.00%
|
150.00
|
50.00%
|
$15.00
|
50.00%
|
160.00
|
60.00%
|
$16.00
|
60.00%
|
(1)
|
This is the
hypothetical
Threshold Value.
|
(2)
|
The Starting Value will be set to 100.00 on the pricing date.
|
(3)
|
This amount represents the sum of the principal amount and the
hypothetical
Step Up Payment of $2.90.
|
(4)
|
This is the
hypothetical
Step Up Value.
|
Market-Linked Step Up Notes
|
TS-
4
|
Market-Linked Step Up Notes
Linked to a Global Equity Basket, due June , 2021 |
|
Redemption Amount Calculation Examples | |
Example 1
|
|
The Ending Value is 85.00, or 85.00% of the Starting Value:
|
|
Starting Value:
100.00
|
|
Threshold Value:
95.00
|
|
Ending Value:
85.00
|
|
|
Redemption Amount per unit
|
Example 2
|
The Ending Value is 96.00, or 96.00% of the Starting Value:
|
Starting Value:
100.00
|
Threshold Value:
95.00
|
Ending Value:
96.00
|
Redemption Amount per unit
= $10.00
, the principal amount, since the Ending Value is less than the Starting Value, but is equal to or greater than the Threshold Value.
|
Example 4
|
|
The Ending Value is 143.00, or 143.00% of the Starting Value:
|
|
Starting Value:
100.00
|
|
Step Up Value:
129.00
|
|
Ending Value:
143.00
|
|
|
Redemption Amount per unit
|
Market-Linked Step Up Notes
|
TS-
5
|
Market-Linked Step Up Notes
Linked to a Global Equity Basket, due June , 2021 |
|
■
|
Depending on the performance of the Basket as measured shortly before the maturity date, your investment may result in a loss; there is no guaranteed return of principal.
|
■
|
Your return on the notes may be less than the yield you could earn by owning a conventional fixed or floating rate debt security of comparable maturity.
|
■
|
Payments on the notes are subject to our credit risk, and the credit risk of BAC, and actual or perceived changes in our or BAC’s creditworthiness are expected to affect the value of the notes. If we and BAC become insolvent or are unable to pay our
respective
obligations, you may lose your entire investment.
|
■
|
Your investment return may be less than a comparable investment directly in the stocks included in the Basket Components
.
|
■
|
We are a finance subsidiary and, as such, will have limited assets and operations.
|
■
|
BAC’s obligations under its guarantee of the notes will be structurally subordinated to liabilities of its subsidiaries
|
■
|
The notes issued by us will not have the benefit of any cross-default or cross-acceleration with other indebtedness of BofA Finance or BAC: events of bankruptcy or insolvency or resolution proceedings relating to BAC and covenant breach by BAC will not constitute an event of default with respect to the notes
|
■
|
The initial estimated value of the notes
considers
certain
assumptions and variables and relies in part on certain forecasts about future events, which may prove to be incorrect. The initial estimate
d
value of the notes
is an estimate only, determined as of a particular point in time by reference to our and our affiliates’ pricing models. These pricing models consider certain assumptions and variables,
including our credit spreads
and those of BAC, BAC’s internal funding
rate on the pricing date, mid-market terms on hedging transactions, expectations on interest rates and volatility, price-sensitivity analysis, and the expected term of the notes. These pricing models rely in part on certain forecasts about future events, which may prove to be incorrect.
|
■
|
The public offering price you pay for the notes will exceed the initial estimated value. If you attempt to sell the notes prior to maturity, their market value may be lower than the price you paid for them and lower than the initial estimated value. This is due to, among other things, changes in the
value
of the Basket
,
BAC’s internal funding rate
, and the inclusion in the public offering price of the underwriting discount and the hedging related charge, all as further described in Structuring the Notes on page TS-
18
. These factors, together with various credit, market and economic factors over the term of the notes, are expected to reduce the price at which you may be able to sell the notes in any secondary market and will affect the value of the notes in complex and unpredictable ways.
|
■
|
The initial estimated value does not represent a minimum or maximum price at which we,
BAC,
MLPF&S or any of our
other
affiliates would be willing to purchase your notes in any secondary market (if any exists) at any time. The value of your notes at any time after issuance will vary based on many factors that cannot be predicted with accuracy, including the performance of the
Basket
, our
and BAC’s
creditworthiness and changes in market conditions.
|
■
|
A trading market is not expected to develop for the notes.
None of us, BAC or
MLPF&S is obligated to make a market for, or to repurchase, the notes. There is no assurance that any party will be willing to purchase your notes at any price in any secondary market.
|
■
|
Your return on the notes may be affected by factors affecting the international securities markets, specifically changes within the Eurozone. The Eurozone is and has been undergoing severe financial stress, and the political, legal and regulatory ramifications are impossible to predict. Changes within the Eurozone could adversely affect the performance of the Index and, consequently, the value of the notes. In addition, you will not obtain the benefit of any increase in the value of the euro against the U.S. dollar, which you would have received if you had owned the securities in the Index during the term of your notes, although the level of the Index may be adversely affected by general exchange rate movements in the market.
|
■
|
BAC and its affiliates’ hedging and trading activities (including trades in shares of companies included in the Basket) and any hedging and trading activities BAC or its affiliates engage in that are not for your account or on your behalf, may affect the market value and return of the notes and may create conflicts of interest with you.
|
■
|
Changes in the value of one of the Basket Components may be offset by changes in the value of the other Basket Components.
Due to the different Initial Component Weights, changes in the level of the SPX will have a more substantial impact on the value of the Basket than similar changes in the level of the SX5E.
|
■
|
The index sponsors may adjust each Basket Component in a way that affects its level, and the index sponsors have no obligation to consider your interests.
|
Market-Linked Step Up Notes
|
TS-
6
|
Market-Linked Step Up Notes
Linked to a Global Equity Basket, due June , 2021 |
|
■
|
You will have no rights of a holder of the securities
represented by
the Basket Components, and you will not be entitled to receive securities or dividends or other distributions by the issuers of those securities.
|
■
|
While BAC and our other affiliates may from time to time own securities of companies included in the Basket Components, except to the extent that BAC’s common stock is included in the S&P 500
®
Index, we, BAC and our other affiliates do not control any company included in any Basket Component, and
have
not
verified
any disclosure made by any other company.
|
■
|
There may be potential conflicts of interest involving the calculation agent, which is an affiliate of ours. We have the right to appoint and remove the calculation agent.
|
■
|
The U.S. federal income tax consequences of the notes are uncertain, and may be adverse to a holder of the notes. See Summary Tax Consequences below and U.S. Federal Income Tax Summary beginning on page PS-28 of product supplement EQUITY INDICES SUN-1.
|
(A) | each of the New York Stock Exchange and NASDAQ Stock Market, Inc. (as to the S&P 500 ® Index), and the Eurex (as to the EURO STOXX 50 ® Index) (or any successor to the foregoing exchanges) are open for trading; and | |
(B) | the Basket Components or any successors thereto are calculated and published. |
Market-Linked Step Up Notes
|
TS-
7
|
Market-Linked Step Up Notes
Linked to a Global Equity Basket, due June , 2021 |
|
Basket Component
|
Bloomberg Symbol
|
Initial Component Weight
|
Closing Level
(1)(2)
|
Hypothetical Component Ratio
(1)(3)
|
Initial Basket Value Contribution
|
|||||
S&P 500
®
Index
|
SPX
|
70.00
|
2,439.07
|
0.02869946
|
70.00
|
|||||
EURO STOXX 50
®
Index
|
SX5E
|
30.00
|
3,591.82
|
0.00835231
|
30.00
|
|||||
Starting Value
|
100.00
|
(1)
|
The actual closing level of each Basket Component and the resulting actual Component Ratios will be determined on the pricing date, subject to adjustment as more fully described in the section entitled Description of the Notes
—
Basket Market Measures
—
Determination of the Component Ratio for Each Basket Component
beginning on page PS-
2
3
of product supplement
EQUITY INDICES
SUN-
1
if a Market Disruption Event occurs on the pricing date as to any Basket Component.
|
(2)
|
These were the closing levels of the Basket Components on June 2, 2017.
|
(3)
|
Each hypothetical Component Ratio equals the Initial Component Weight of the relevant Basket Component (as a percentage) multiplied by 100, and then divided by the closing level of that Basket Component on June 2, 2017 and rounded to eight decimal places.
|
Market-Linked Step Up Notes
|
TS-
8
|
Market-Linked Step Up Notes
Linked to a Global Equity Basket, due June , 2021 |
|
Market-Linked Step Up Notes
|
TS-
9
|
Market-Linked Step Up Notes
Linked to a Global Equity Basket, due June , 2021 |
|
Market-Linked Step Up Notes
|
TS-
10
|
Market-Linked Step Up Notes
Linked to a Global Equity Basket, due June , 2021 |
|
Market-Linked Step Up Notes
|
TS-
11
|
Market-Linked Step Up Notes
Linked to a Global Equity Basket, due June , 2021 |
|
Market-Linked Step Up Notes
|
TS-
12
|
Market-Linked Step Up Notes
Linked to a Global Equity Basket, due June , 2021 |
|
Market-Linked Step Up Notes
|
TS-
13
|
Market-Linked Step Up Notes
Linked to a Global Equity Basket, due June , 2021 |
|
Market-Linked Step Up Notes
|
TS-
14
|
Market-Linked Step Up Notes
Linked to a Global Equity Basket, due June , 2021 |
|
Market-Linked Step Up Notes
|
TS-
15
|
Market-Linked Step Up Notes
Linked to a Global Equity Basket, due June , 2021 |
|
●
|
sponsor, endorse, sell or promote the notes.
|
●
|
recommend that any person invest in the notes or any other securities.
|
●
|
have any responsibility or liability for or make any decisions about the timing, amount or pricing of the notes.
|
●
|
have any responsibility or liability for the administration, management or marketing of the notes.
|
●
|
consider the needs of the notes or the owners of the notes in determining, composing or calculating the Index or have any obligation to do so.
|
●
|
STOXX, Deutsche Borse Group and their licensors, research partners or data providers do not give any warranty, express or implied, and exclude any liability about:
|
●
|
STOXX, Deutsche Borse Group and their licensors, research partners or data providers give no warranty and exclude any liability, for any errors, omissions or interruptions in the Index or its data;
|
●
|
Under no circumstances will STOXX, Deutsche Borse Group or their licensors, research partners or data providers be liable (whether in negligence or otherwise) for any lost profits or indirect, punitive, special or consequential damages or losses, arising as a result of such errors, omissions or interruptions in the Index or its data or generally in relation to the notes, even in circumstances where STOXX, Deutsche Borse Group or their licensors, research partners or data providers are aware that such loss or damage may occur.
|
Market-Linked Step Up Notes
|
TS-
16
|
Market-Linked Step Up Notes
Linked to a Global Equity Basket, due June , 2021 |
|
●
|
the investor’s spouse (including a domestic partner), siblings, parents, grandparents, spouse’s parents, children and grandchildren, but excluding accounts held by aunts, uncles, cousins, nieces, nephews or any other family relationship not directly above or below the individual investor;
|
●
|
a family investment vehicle, including foundations, limited partnerships and personal holding companies, but only if the beneficial owners of the vehicle consist solely of the investor or members of the investor’s household as described above;
and
|
●
|
a trust where the grantors and/or beneficiaries of the trust consist solely of the investor or members of the investor’s household as described above; provided that, purchases of the notes by a trust generally cannot be aggregated together with any purchases made by a trustee’s personal account.
|
Market-Linked Step Up Notes
|
TS-
17
|
Market-Linked Step Up Notes
Linked to a Global Equity Basket, due June , 2021 |
|
■
|
There is no statutory, judicial, or administrative authority directly addressing the characterization of the notes.
|
■
|
You agree with us (in the absence of an administrative determination, or judicial ruling to the contrary) to characterize and treat the notes for all tax purposes as a single financial contract with respect to the
Basket.
|
■
|
Under this characterization and tax treatment of the notes, a U.S. Holder (as defined beginning
on page
50
of the prospectus
) generally will recognize capital gain or loss upon maturity or upon a sale or exchange of the notes prior to maturity. This capital gain or loss generally will be long-term capital gain or loss if you held the notes for more than one year.
|
■
|
No assurance can be given that the
IRS
or any court will agree with this characterization and tax treatment.
|
■
|
U.S. Treasury regulations provide that withholding on dividend equivalent payments (as discussed in the product supplement), if any, will not apply to specified ELIs that are not delta-one instruments and that are issued before January 1, 2018.
|
Market-Linked Step Up Notes
|
TS-
18
|
Market-Linked Step Up Notes
Linked to a Global Equity Basket, due June , 2021 |
|
Market-Linked Step Up Notes
|
TS-
19
|
1 Year Bank of America Chart |
1 Month Bank of America Chart |
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