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Share Name | Share Symbol | Market | Type |
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Bank of America Corporation | NYSE:BAC | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.45 | 1.22% | 37.33 | 37.53 | 37.08 | 37.25 | 34,082,664 | 01:00:00 |
Filed Pursuant to Rule 424(b)(2)
Registration Statement No. 333-234425 (To Prospectus dated December 31, 2019, Prospectus Supplement dated December 31, 2019 and Product Supplement EQUITY INDICES STR-1 dated March 6, 2020) |
Units
$10 principal amount per unit CUSIP No. |
Pricing Date*
Settlement Date* Maturity Date* |
July , 2021
August , 2021 August , 2022 |
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*Subject to change based on the actual date the notes are priced for initial sale to the public (the pricing date)
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BofA Finance LLC
Strategic Accelerated Redemption Securities® Linked to a Basket of Sector Indices
Fully and Unconditionally Guaranteed by Bank of America Corporation
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Automatically callable if the Observation Level of the Basket on any Observation Date, occurring approximately six, nine, and twelve months after the pricing date, is at or above the Starting Value
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In the event of an automatic call, the amount payable per unit will be:
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[$10.550 to $10.600] if called on the first Observation Date
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[$10.825 to $10.900] if called on the second Observation Date
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[$11.100 to $11.200] if called on the final Observation Date
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If not called on the first or second Observation Dates, a maturity of approximately one year
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The Basket will be approximately equally weighted on the pricing date and will be comprised of the Financials Select Sector Index, the Energy Select Sector Index, and the Health Care Select Sector Index.
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If not called, 1-to-1 downside exposure to decreases in the Basket, with up to 100% of your principal at risk
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All payments are subject to the credit risk of BofA Finance LLC, as issuer of the notes, and the credit risk of Bank of America Corporation, as guarantor of the notes
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No periodic interest payments
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In addition to the underwriting discount set forth below, the notes include a hedging-related charge of $0.05 per unit. See Structuring the Notes
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Limited secondary market liquidity, with no exchange listing
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Per Unit
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Total
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Public offering price(1)
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$10.000
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$
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Underwriting discount(1)
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$ 0.125
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$
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Proceeds, before expenses, to BofA Finance
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$ 9.875
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$
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(1)
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For any purchase of 300,000 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 $9.975 per unit and $0.100 per unit, respectively. See Supplement to the Plan of Distribution; Conflicts of Interest below.
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Are Not FDIC Insured
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Are Not Bank Guaranteed
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May Lose Value
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Strategic Accelerated Redemption Securities®
Linked to a Basket of Sector Indices, due August , 2022
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Strategic Accelerated Redemption Securities®
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TS-2
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Strategic Accelerated Redemption Securities®
Linked to a Basket of Sector Indices, due August , 2022
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Fees and Charges:
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The underwriting discount of $0.125 per unit listed on the cover page and the hedging related charge of $0.05 per unit described in Structuring the Notes on page TS-19.
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Calculation Agent:
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BofA Securities, Inc. (BofAS), an affiliate of BofA Finance.
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Strategic Accelerated Redemption Securities®
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TS-3
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Strategic Accelerated Redemption Securities®
Linked to a Basket of Sector Indices, due August , 2022
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Product supplement EQUITY INDICES STR-1 dated March 6, 2020:
https://www.sec.gov/Archives/edgar/data/70858/000119312520064515/d875203d424b5.htm |
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Series A MTN prospectus supplement dated December 31, 2019 and prospectus dated December 31, 2019:
https://www.sec.gov/Archives/edgar/data/70858/000119312519326462/d859470d424b3.htm |
Strategic Accelerated Redemption Securities®
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TS-4
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Strategic Accelerated Redemption Securities®
Linked to a Basket of Sector Indices, due August , 2022
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1)
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the Starting Value of 100.00;
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2)
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the Threshold Value of 100.00;
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3)
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the Call Level of 100.00;
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4)
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an expected term of the notes of approximately one year, if the notes are not called on the first or second Observation Dates;
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5)
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a Call Premium of 5.750% of the principal amount if the notes are called on the first Observation Date, 8.625% if called on the second Observation Date, and 11.500% if called on the final Observation Date (the midpoint of the applicable Call Premium ranges); and
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6)
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Observation Dates occurring approximately six, nine, and twelve months after the pricing date.
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Strategic Accelerated Redemption Securities®
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TS-5
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Strategic Accelerated Redemption Securities®
Linked to a Basket of Sector Indices, due August , 2022
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Strategic Accelerated Redemption Securities®
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TS-6
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Strategic Accelerated Redemption Securities®
Linked to a Basket of Sector Indices, due August , 2022
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■
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If the notes are not automatically called, your investment will result in a loss; there is no guaranteed return of principal.
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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.
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Payments on the notes are subject to our credit risk, and the credit risk of BAC, and any 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.
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Your investment return is limited to the return represented by the applicable Call Premium and may be less than a comparable investment directly in the stocks included in the Basket Components.
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Changes in the levels of the Basket Components may offset each other.
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We are a finance subsidiary and, as such, have no independent assets, operations or revenues.
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BAC’s obligations under its guarantee of the notes will be structurally subordinated to liabilities of its subsidiaries.
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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.
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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 estimated 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.
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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, changes in 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-19. 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.
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The initial estimated value does not represent a minimum or maximum price at which we, BAC, MLPF&S, BofAS 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.
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A trading market is not expected to develop for the notes. None of us, BAC, MLPF&S or BofAS 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.
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BAC and its affiliates’ hedging and trading activities (including trades in shares of companies included in the Basket Components) 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.
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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.
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The sponsor of a Basket Component may adjust that Basket Component in a way that affects its level, and has no obligation to consider your interests.
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Strategic Accelerated Redemption Securities®
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TS-7
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Strategic Accelerated Redemption Securities®
Linked to a Basket of Sector Indices, due August , 2022
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■
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You will have no rights of a holder of the securities included in the Basket Components, and you will not be entitled to receive securities or dividends or other distributions by the issuers of those securities.
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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 any Basket Component, 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.
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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-29 of the accompanying product supplement.
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(A)
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each of the New York Stock Exchange and NASDAQ Stock Market, Inc. (or any successors to the foregoing exchanges) are open for trading; and
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(B)
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the Basket Components or any successors thereto are calculated and published.
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Strategic Accelerated Redemption Securities®
|
TS-8
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Strategic Accelerated Redemption Securities®
Linked to a Basket of Sector Indices, due August , 2022
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Basket Component
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Bloomberg Symbol
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Initial Component Weight
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Closing Level(1)(2)
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Hypothetical Component Ratio(1)(3)
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Initial Basket Value Contribution
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Financials Select Sector Index
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IXM
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33.34%
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445.20
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0.07488769
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33.34
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Energy Select Sector Index
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IXE
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33.33%
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510.18
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0.06532988
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33.33
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Health Care Select Sector Index
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IXV
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33.33%
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1,299.73
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0.02564379
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33.33
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Starting Value
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100.00
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(1)
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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 NotesBasket Market MeasuresDetermination of the Component Ratio for Each Basket Component beginning on page PS-25 of the accompanying product supplement if a Market Disruption Event occurs on the pricing date as to any Basket Component. In addition, if the pricing date is determined by the calculation agent not to be a Market Measure Business Day for any Basket Component by reason of an extraordinary event, occurrence, declaration or otherwise, the calculation agent will establish the closing level of that Basket Component, and thus its Component Ratio, in the same manner as if a Market Disruption Event occurred as to that Basket Component.
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(2)
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These were the closing levels of the Basket Components on July 16, 2021.
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(3)
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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 July 16, 2021 and rounded to eight decimal places.
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Strategic Accelerated Redemption Securities®
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TS-9
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Strategic Accelerated Redemption Securities®
Linked to a Basket of Sector Indices, due August , 2022
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Strategic Accelerated Redemption Securities®
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TS-10
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Strategic Accelerated Redemption Securities®
Linked to a Basket of Sector Indices, due August , 2022
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Each of the component stocks in a Select Sector Index (the component stocks) is a constituent company of the S&P 500® Index.
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The eleven Select Sector Indices together will include all of the companies represented in the S&P 500® Index and each of the stocks in the S&P 500® Index will be allocated to at least one of the Select Sector Indices.
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Each constituent stock of the S&P 500 Index is assigned to a Select Sector Index based on its GICS sector. Each Select Sector Index is made up of all the stocks in the applicable GICS sector.
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Each Select Sector Index is calculated by the Index sponsor using a capped market capitalization methodology where single index constituents or defined groups of index constituents are confined to a maximum weight and the excess weight is distributed proportionally among the remaining index constituents. Each Select Sector Index is rebalanced from time to time to re-establish the proper weighting.
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For reweighting purposes, each Select Sector Index is rebalanced quarterly after the close of business on the third Friday of March, June September and December using the following procedures: (1) The rebalancing reference date is the second Friday of March, June, September and December; (2) With prices reflected on the rebalancing reference date, and membership, shares outstanding and investable weight factors (as described in the section Computation of the S&P 500 Index® below) as of the rebalancing effective date, each company is weighted by float-adjusted market capitalization methodology. Modifications are made as defined below.
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(i)
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If any component stock has a weight greater than 24%, that component stock has its float-adjusted market capitalization weight capped at 23%. The 23% weight cap creates a 2% buffer to ensure that no component stock exceeds 25% as of the quarter-end diversification requirement date.
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(ii)
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All excess weight is equally redistributed to all uncapped component stocks within the relevant Select Sector Index.
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(iii)
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After this redistribution, if the float-adjusted market capitalization weight of any other component stock(s) then breaches 23%, the process is repeated iteratively until no component stocks breaches the 23% weight cap.
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Strategic Accelerated Redemption Securities®
|
TS-11
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Strategic Accelerated Redemption Securities®
Linked to a Basket of Sector Indices, due August , 2022
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(iv)
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The sum of the component stocks with weights greater than 4.8% cannot exceed 50% of the total index weight. These caps are set to allow for a buffer below the 5% limit.
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(v)
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If the rule in step (iv) is breached, all the component stocks are ranked in descending order of their float-adjusted market capitalization weights and the first component stock that causes the 50% limit to be breached has its weight reduced to 4.5%.
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(vi)
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This excess weight is equally redistributed to all component stocks with weights below 4.5%. This process is repeated iteratively until step (iv) is satisfied.
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(vii)
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Index share amounts are assigned to each component stock to arrive at the weights calculated above. Since index shares are assigned based on prices one business day prior to rebalancing, the actual weight of each component stock at the rebalancing differs somewhat from these weights due to market movements.
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(viii)
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If necessary, the reweighting process may take place more than once prior to the close on the last business day of March, June, September or December to ensure conformity with all diversification requirements.
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Strategic Accelerated Redemption Securities®
|
TS-12
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Strategic Accelerated Redemption Securities®
Linked to a Basket of Sector Indices, due August , 2022
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Strategic Accelerated Redemption Securities®
|
TS-13
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Strategic Accelerated Redemption Securities®
Linked to a Basket of Sector Indices, due August , 2022
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Strategic Accelerated Redemption Securities®
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TS-14
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Strategic Accelerated Redemption Securities®
Linked to a Basket of Sector Indices, due August , 2022
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Strategic Accelerated Redemption Securities®
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TS-15
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Strategic Accelerated Redemption Securities®
Linked to a Basket of Sector Indices, due August , 2022
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Strategic Accelerated Redemption Securities®
|
TS-16
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Strategic Accelerated Redemption Securities®
Linked to a Basket of Sector Indices, due August , 2022
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Strategic Accelerated Redemption Securities®
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TS-17
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Strategic Accelerated Redemption Securities®
Linked to a Basket of Sector Indices, due August , 2022
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●
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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;
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●
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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
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●
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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.
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Strategic Accelerated Redemption Securities®
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TS-18
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Strategic Accelerated Redemption Securities®
Linked to a Basket of Sector Indices, due August , 2022
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Strategic Accelerated Redemption Securities®
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TS-19
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Strategic Accelerated Redemption Securities®
Linked to a Basket of Sector Indices, due August , 2022
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There is no statutory, judicial, or administrative authority directly addressing the characterization of the notes.
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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 callable single financial contract with respect to the Basket.
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Under this characterization and tax treatment of the notes, a U.S. Holder (as defined beginning on page 38 of the prospectus) generally will recognize capital gain or loss upon maturity or upon a sale, exchange, or redemption 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.
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No assurance can be given that the Internal Revenue Service (IRS) or any court will agree with this characterization and tax treatment.
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Under current IRS guidance, withholding on dividend equivalent payments (as discussed in the product supplement), if any, will not apply to notes that are issued as of the date of this term sheet unless such notes are delta-one instruments.
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Strategic Accelerated Redemption Securities®
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TS-20
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1 Year Bank of America Chart |
1 Month Bank of America Chart |
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