Bank of America Announces Redemption of CAD1,000,000,000 2.932% Fixed/Floating Rate Senior Notes due April 2025

Rhea-AI Summary

Bank of America announces the redemption of CAD1,000,000,000 principal amount outstanding of its 2.932% Fixed/Floating Rate Senior Notes, due April 2025. The redemption will take place on April 25, 2024, at a redemption price equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest.

Insights

Financial Analyst

Bank of America's decision to redeem its 2.932% Fixed/Floating Rate Senior Notes ahead of maturity indicates a strategic move to manage its debt portfolio. By redeeming these notes at 100% of the principal amount, the bank is likely taking advantage of current market conditions to refinance its debt at a potentially lower interest rate, which could reduce interest expenses and improve net interest margins. This is a common practice among large financial institutions to maintain an optimal capital structure and minimize cost of capital.

Investors should note that the early redemption of debt could imply that the bank has a strong liquidity position, reflecting positively on its balance sheet. However, it is also important to consider the opportunity cost for note holders who will be paid back their principal but might find it challenging to reinvest at similar returns given the current interest rate environment. This action might be perceived as a signal of confidence from the bank's management regarding their financial stability and future earnings potential.

Debt Market Analyst

From a debt market perspective, the redemption of Bank of America's Senior Notes can influence the supply and demand dynamics within the fixed income market. The removal of CAD1,000,000,000 from the market will reduce the available high-grade investment options for investors, potentially driving demand for remaining securities. This could have a slight tightening effect on credit spreads for similar instruments.

Furthermore, the bank's choice to redeem at a redemption price equal to the principal amount plus accrued interest is standard, yet it reaffirms the bank's commitment to fulfilling its obligations, potentially reinforcing investor confidence in future debt issuances by Bank of America. The involvement of reputable institutions such as The Bank of New York Mellon Trust Company, N.A. and BNY Trust Company of Canada as trustee and paying agent, respectively, ensures a smooth transaction process, which is a positive reflection on the bank's operational efficiency.

CHARLOTTE, N.C., March 22, 2024 /PRNewswire/ -- Bank of America Corporation announced today that it will redeem on April 25, 2024 all CAD1,000,000,000 principal amount outstanding of its 2.932% Fixed/Floating Rate Senior Notes, due April 2025 (CUSIP No. 060505FM1, ISIN: CA060505FM13) (the "Notes"), at a redemption price equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest to, but excluding, the redemption date of April 25, 2024.  Interest on the Notes will cease to accrue on the redemption date.

Payment of the redemption price for the Notes will be made in accordance with the applicable procedures of CDS Clearing and Depository Services Inc. The Bank of New York Mellon Trust Company, N.A. is the trustee and BNY Trust Company of Canada is the paying agent for the Notes.

Bank of America

Bank of America is one of the world's leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 69 million consumer and small business clients with approximately 3,800 retail financial centers, approximately 15,000 ATMs (automated teller machines) and award-winning digital banking with approximately 57 million verified digital users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 4 million small business households through a suite of innovative, easy-to-use online products and services. The company serves clients through operations across the United States, its territories and more than 35 countries. Bank of America Corporation stock is listed on the New York Stock Exchange (NYSE: BAC).

Forward-looking statements

Certain information contained in this news release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements are not guarantees of future results or performance and involve certain risks, uncertainties and assumptions difficult to predict or beyond our control. You should not place undue reliance on any forward-looking statement and should consider the uncertainties and risks discussed under Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023 and in any of our subsequent Securities and Exchange Commission filings.  Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update any forward-looking statement to reflect the impact of circumstances or events that arise after the date the forward-looking statement was made.

For more Bank of America news, including dividend announcements and other important information, visit the Bank of America newsroom and register for news email alerts.

Investors may contact:

Lee McEntire, Bank of America
Phone:  1.980.388.6780
lee.mcentire@bofa.com

Jonathan G. Blum, Bank of America (Fixed Income)
Phone:  1.212.449.3112
jonathan.blum@bofa.com

Reporters may contact:

Bill Halldin, Bank of America
Phone:  1.916.724.0093
william.halldin@bofa.com 

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SOURCE Bank of America Corporation

FAQ

What is Bank of America redeeming?

Bank of America is redeeming CAD1,000,000,000 principal amount outstanding of its 2.932% Fixed/Floating Rate Senior Notes, due April 2025.

When will the redemption take place?

The redemption is scheduled for April 25, 2024.

What is the redemption price for the Notes?

The redemption price is equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest.

Where is the Bank of America stock listed?

Bank of America stock is listed on the New York Stock Exchange under the ticker symbol BAC.