3-to-1 Amazon-linked ARNs due May 2027 from Bank of America (NYSE: BAC)
Rhea-AI Filing Summary
The Accelerated Return Notes are senior unsecured notes issued by BofA Finance LLC and fully guaranteed by Bank of America Corporation. Each unit has a $10 principal amount and a term of approximately one year, linked to the common stock of Amazon.com, Inc.
Holders receive at maturity either (a) a leveraged positive return equal to 300% participation in the percentage increase of the Underlying Stock capped at a Capped Value of $13.00–$13.30 per unit (a 30.00%–33.00% capped return), or (b) a payment reflecting a 1:1 loss if the stock declines (principal at risk). The public offering price is $10.00 per unit and the initial estimated value range on the pricing date is expected to be $9.325–$9.825 per unit.
Positive
- None.
Negative
- None.
Insights
ARNs provide leveraged upside with a fixed cap and full issuer credit exposure.
The notes offer a 300% participation in upside subject to a 30.00%–33.00% cap, which converts equity performance into a debt-like payoff. Returns depend on the Starting and Ending Values and are paid only at maturity.
Key sensitivities include BAC credit risk, the internal funding rate used in pricing, and the lack of expected secondary liquidity; these factors drive the initial estimated value being below the offering price.
U.S. federal tax treatment of the notes is uncertain and may be adverse.
The issuer asks holders to treat the notes as a single financial contract tied to the Underlying Stock and anticipates capital gain/loss treatment on disposition or maturity. The IRS or courts might disagree with this characterization.
Investors should consult advisors regarding potential withholding on "dividend equivalent" payments and other tax outcomes described in the product supplement.
Key Figures
Key Terms
Participation Rate financial
Capped Value financial
BAC's internal funding rate financial
Final Calculation Day regulatory
Market Measure financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
What are the payoff terms for BAC ARNs linked to AMZN?
How much does BAC receive per unit from this offering?
What credit and market risks apply to BAC’s ARNs (AMZN)?
What is the expected initial estimated value and offering spread?
This pricing supplement, which is not complete and may be changed, relates to an effective Registration Statement under the Securities Act of 1933. This pricing supplement and the accompanying product supplement, prospectus supplement and prospectus are not an offer to sell these notes in any country or jurisdiction where such an offer would not be permitted.
|
Subject to Completion Preliminary Term Sheet dated May 1, 2026 |
Filed Pursuant to Rule 424(b)(2) Registration Statement Nos. 333-290665 and 333-290665-01 (To Prospectus dated December 8, 2025, Prospectus Supplement dated December 8, 2025 and Product Supplement EQUITY MLI-1 dated December 8, 2025) |
Units |
Pricing Date* |
May , 2026 May , 2026 May , 2027 |
|
|||
*Subject to change based on the actual date the notes are priced for initial sale to the public (the “pricing date”) |
||||||
|
||||||
|
|
|
|
|
||
BofA Finance LLC Accelerated Return Notes® Linked to the Common Stock of Amazon.com, Inc. Fully and Unconditionally Guaranteed by Bank of America Corporation ■Maturity of approximately one year ■3-to-1 upside exposure to increases in the Underlying Stock, subject to a capped return of [30.00% to 33.00%] ■1-to-1 downside exposure to decreases in the Underlying Stock, with 100% of your investment at risk ■All payments occur at maturity and 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 ■No periodic interest payments ■Limited secondary market liquidity, with no exchange listing |
|
|||||
|
|
|||||
The notes are being issued by BofA Finance LLC (“BofA Finance”) and are fully and unconditionally guaranteed by Bank of America Corporation (“BAC”). There are important differences between the notes and a conventional debt security, including different investment risks and certain additional costs. See “Risk Factors” beginning on page TS-8 of this term sheet, page PS-4 of the accompanying product supplement, page S-7 of the accompanying Series A MTN prospectus supplement and page 7 of the accompanying prospectus.
The initial estimated value of the notes as of the pricing date is expected to be between $9.325 and $9.825 per unit, which is less than the public offering price listed below. See “Summary” on the following page, “Risk Factors” beginning on page TS-8 of this term sheet and “Structuring the Notes” on page TS-12 of this term sheet for additional information. The actual value of your notes at any time will reflect many factors and cannot be predicted with accuracy.
_________________________
None of the Securities and Exchange Commission (the “SEC”), any state securities commission, or any other regulatory body has approved or disapproved of these securities or determined if this Note Prospectus (as defined below) is truthful or complete. Any representation to the contrary is a criminal offense.
_________________________
|
Per Unit |
Total |
Public offering price(1) |
$10.00 |
$ |
Underwriting discount(1)(2) |
$0.125 |
$ |
|
$0.05 |
$ |
Proceeds, before expenses, to BofA Finance |
$9.825 |
$ |
(1)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 $0.150 per unit, respectively. See “Supplement to the Plan of Distribution; Conflicts of Interest” below.
(2)The underwriting discount reflects a sales commission of $0.125 per unit ($0.100 per unit in the case of sales pursuant to footnote 1 above) and a structuring fee of $0.05 per unit.
The notes and the related guarantee:
Are Not FDIC Insured |
Are Not Bank Guaranteed |
May Lose Value |
Accelerated Return Notes® |
|
Summary
The Accelerated Return Notes® Linked to the Common Stock of Amazon.com, Inc., due May , 2027 (the “notes”) are our senior unsecured debt securities. Payments on the notes are fully and unconditionally guaranteed by BAC. The notes and the related guarantee are not insured by the Federal Deposit Insurance Corporation or secured by collateral. The notes will rank equally in right of payment with all of BofA Finance's other unsecured and unsubordinated obligations, except obligations that are subject to any priorities or preferences by law. The guarantee will rank equally in right of payment with all of BAC’s other unsecured and unsubordinated obligations, except obligations that are subject to any priorities or preferences by law, and senior to its subordinated obligations. Any payments due on the notes, including any repayment of principal, will be subject to the credit risk of BofA Finance, as issuer, and BAC, as guarantor. The notes provide you a leveraged return, subject to a cap, if the Ending Value of the Market Measure, which is the common stock of Amazon.com, Inc. (the “Underlying Stock”) is greater than the Starting Value. If the Ending Value is less than the Starting Value, you will lose all or a portion of the principal amount of your notes. Any payments on the notes will be calculated based on the $10 principal amount per unit and will depend on the performance of the Underlying Stock, subject to our credit risk. See “Terms of the Notes” below.
The economic terms of the notes (including the Capped Value) are based on BAC’s internal funding rate, which is the rate it would pay to borrow funds through the issuance of market-linked notes and the economic terms of certain related hedging arrangements. BAC’s internal funding rate is typically lower than the rate it would pay when it issues conventional fixed or floating rate debt securities. This difference in funding rate, as well as the underwriting discount and costs associated with hedging the notes, will reduce the economic terms of the notes to you and the initial estimated value of the notes on the pricing date. Due to these factors, the public offering price you pay to purchase the notes will be greater than the initial estimated value of the notes.
On the cover page of this term sheet, we have provided the initial estimated value range for the notes. This initial estimated value range was determined based on our, BAC’s and our other affiliates’ pricing models, which take into consideration BAC’s internal funding rate and the market prices for the hedging arrangements related to the notes. The initial estimated value of the notes calculated on the pricing date will be set forth in the final term sheet made available to investors in the notes. For more information about the initial estimated value and the structuring of the notes, see “Structuring the Notes” on page TS-12.
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 one year |
||
Market Measure: |
The common stock of Amazon.com, Inc. (Nasdaq Global Select Market symbol: “AMZN”) |
||
Starting Value: |
The Closing Market Price of the Market Measure on the pricing date. |
||
Ending Value: |
The Closing Market Price of the Market Measure on the Final Calculation Day, multiplied by its Price Multiplier as of that day. The scheduled Final Calculation Day is subject to postponement in the event of Market Disruption Events and non-Market Measure Business Days, as described beginning on page PS-26 of the accompanying product supplement. |
||
Participation Rate: |
300.00%. |
||
Capped Value: |
[$13.00 to $13.30] per unit, which represents a return of [30.00% to 33.00%] over the principal amount. The actual Capped Value will be determined on the pricing date. |
||
Price Multiplier: |
1, subject to adjustments for certain corporate events relating to the Underlying Stock described beginning on PS-37 of the accompanying product supplement. |
||
Fees and Charges: |
The underwriting discount of $0.175 per unit listed on the cover page. |
||
Calculation Agent: |
BofA Securities, Inc. (“BofAS”), an affiliate of BofA Finance. |
||
Final Calculation Day / Maturity Valuation Period: |
Approximately the fifth scheduled Market Measure Business Day immediately preceding the maturity date. |
||
Event of Default: |
Events of default are defined in the senior indenture. If such event occurs and is continuing, the amount payable to a holder of the notes upon any acceleration permitted under the senior indenture will be equal to the Redemption Amount described above determined as if the date of acceleration were the maturity date of the notes and as if the Final Calculation Day were the fifth Market Measure Business Day prior to the date of acceleration. |
||
Accelerated Return Notes® |
|
The terms and risks of the notes are contained in this term sheet and in the following:
●Product supplement EQUITY MLI-1 dated December 8, 2025:
https://www.sec.gov/Archives/edgar/data/70858/000119312525311325/d19794d424b2.htm
●Series A MTN prospectus supplement dated December 8, 2025 and prospectus dated December 8, 2025: https://www.sec.gov/Archives/edgar/data/70858/000119312525310920/d51586d424b3.htm
These documents (together, the “Note Prospectus”) have been filed as part of a registration statement with the SEC, which may, without cost, be accessed on the SEC website at www.sec.gov or obtained from Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S") or BofAS by calling 1-800-294-1322. Before you invest, you should read the Note Prospectus, including this term sheet, for information about us, BAC and this offering. Any prior or contemporaneous oral statements and any other written materials you may have received are superseded by the Note Prospectus. Certain terms used but not defined in this term sheet have the meanings set forth in the accompanying product supplement, the accompanying prospectus supplement and the accompanying prospectus. Unless otherwise indicated or unless the context requires otherwise, all references in this document to “we,” “us,” “our,” or similar references are to BofA Finance, and not to BAC.
Investor Considerations
You may wish to consider an investment in the notes if: |
The notes may not be an appropriate investment for you if: |
||
■You anticipate that the Underlying Stock will increase moderately from the Starting Value to the Ending Value. ■You are willing to risk a loss of principal and return if the Underlying Stock decreases from the Starting Value to the Ending Value. ■You accept that the return on the notes will be capped. ■You are willing to forgo the interest payments that are paid on conventional interest-bearing debt securities. ■You are willing to forgo dividends or other benefits of owning shares of the Underlying Stock. ■You are willing to accept a limited or no market for sales prior to maturity, and understand that the market prices for the notes, if any, will be affected by various factors, including our and BAC’s actual and perceived creditworthiness, BAC’s internal funding rate and fees and charges on the notes. ■You are willing to assume our credit risk, as issuer of the notes, and BAC’s credit risk, as guarantor of the notes, for all payments under the notes, including the Redemption Amount. |
■You believe that the Underlying Stock will decrease from the Starting Value to the Ending Value or that it will not increase sufficiently over the term of the notes to provide you with your desired return. ■You seek principal repayment or preservation of capital. ■You seek an uncapped return on your investment. ■You seek interest payments or other current income on your investment. ■You want to receive dividends or other distributions paid on shares of the Underlying Stock. ■You seek an investment for which there will be a liquid secondary market. ■You are unwilling or are unable to take market risk on the notes, to take our credit risk, as issuer of the notes, or to take BAC’s credit risk, as guarantor of the notes. |
||
We urge you to consult your investment, legal, tax, accounting, and other advisors before you invest in the notes.
Accelerated Return Notes® |
|
Hypothetical Payout Profile and Examples of Payments at Maturity
The below graph is based on hypothetical numbers and values.
Accelerated Return Notes®
|
This graph reflects the returns on the notes, based on the Participation Rate of 300% and a Capped Value of $13.15 per unit (the midpoint of the Capped Value range of [$13.00 to $13.30]). The green line reflects the returns on the notes, while the dotted gray line reflects the returns of a direct investment in the Underlying Stock, excluding dividends. This graph has been prepared for purposes of illustration only. |
The following table and examples are for purposes of illustration only. They are based on hypothetical values and show hypothetical returns on the notes. They illustrate the calculation of the Redemption Amount and total rate of return based on a hypothetical Starting Value of 100, the Participation Rate of 300%, a Capped Value of $13.15 per unit (the midpoint of the Capped Value range of [$13.00 to $13.30]) and a range of hypothetical Ending Values. The actual amount you receive and the resulting total rate of return will depend on the actual Starting Value, Ending Value, Capped Value and whether you hold the notes to maturity. The following examples do not take into account any tax consequences from investing in the notes.
For recent actual prices of the Market Measure, see “The Underlying Stock” section below. The Ending Value will not include any income generated by dividends paid on the Underlying Stock, which you would otherwise be entitled to receive if you invested in the Underlying Stock. In addition, all payments on the notes are subject to issuer and guarantor credit risk.
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% |
$0.00 |
-100.00% |
50.00 |
-50.00% |
$5.00 |
-50.00% |
60.00 |
-40.00% |
$6.00 |
-40.00% |
70.00 |
-30.00% |
$7.00 |
-30.00% |
80.00 |
-20.00% |
$8.00 |
-20.00% |
90.00 |
-10.00% |
$9.00 |
-10.00% |
95.00 |
-5.00% |
$9.50 |
-5.00% |
97.00 |
-3.00% |
$9.70 |
-3.00% |
100.00(1) |
0.00% |
$10.00 |
0.00% |
102.00 |
2.00% |
$10.60 |
6.00% |
103.00 |
3.00% |
$10.90 |
9.00% |
105.00 |
5.00% |
$11.50 |
15.00% |
110.50 |
10.50% |
$13.15(2) |
31.50% |
120.00 |
20.00% |
$13.15 |
31.50% |
130.00 |
30.00% |
$13.15 |
31.50% |
140.00 |
40.00% |
$13.15 |
31.50% |
150.00 |
50.00% |
$13.15 |
31.50% |
(1)The hypothetical Starting Value of 100 used in these examples has been chosen for illustrative purposes only, and does not represent a likely actual Starting Value for the Market Measure.
(2)The Redemption Amount per unit cannot exceed the hypothetical Capped Value.
Accelerated Return Notes® |
|
Redemption Amount Calculation Examples
Example 1 |
|
The Ending Value is 50.00, or 50.00% of the Starting Value: |
|
Starting Value:100.00 |
|
Ending Value:50.00 |
|
|
= $5.00 Redemption Amount per unit |
Example 2 |
|
The Ending Value is 102.00, or 102.00% of the Starting Value: |
|
Starting Value:100.00 |
|
Ending Value:102.00 |
|
|
= $10.60 Redemption Amount per unit |
Example 3 |
|
The Ending Value is 130.00, or 130.00% of the Starting Value: |
|
Starting Value:100.00 |
|
Ending Value:130.00 |
|
|
= $19.00, however, because the Redemption Amount for the notes cannot exceed the Capped Value, the Redemption Amount will be $13.15 per unit |
Accelerated Return Notes® |
|
Risk Factors
There are important differences between the notes and a conventional debt security. An investment in the notes involves significant risks, including those listed below. You should carefully review the more detailed explanation of risks relating to the notes in the “Risk Factors” sections beginning on page PS-4 of the product supplement, page S-7 of the Series A MTN prospectus supplement, and page 7 of the prospectus identified above. We also urge you to consult your investment, legal, tax, accounting, and other advisors before you invest in the notes.
Structure-related Risks
■There is no fixed principal repayment amount on the notes at maturity. If the Ending Value is less than the Starting Value, you will lose up to 100% of the principal amount of your notes.
■Payments on the notes will not reflect changes in the value of the Underlying Stock other than on the Final Calculation Day. As a result, you will receive a Redemption Amount that is less than the principal amount if the Ending Value is less than the Starting Value on the Final Calculation Day, even if the price of the Underlying Stock was always greater than the Starting Value prior to such Final Calculation Day.
■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.
■Your investment return is limited to the return represented by the Capped Value and may be less than a comparable investment directly in the Underlying Stock.
■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.
■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.
Valuation- and Market-related Risks
■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.
■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 price of the Underlying Stock, changes in BAC’s internal funding rate, and the inclusion in the public offering price of the underwriting discount and costs associated with hedging the notes, all as further described in “Structuring the Notes” on page TS-12. 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, 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 Underlying Stock, 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, 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.
Accelerated Return Notes® |
|
Conflict-related Risks
■BAC and its affiliates’ hedging and trading activities (including trades in the Underlying Stock) 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.
■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.
Market Measure-related Risks
■You will have no rights of a holder of the Underlying Stock and you will not be entitled to receive shares of the Underlying Stock or dividends or other distributions by the Underlying Company.
■The Underlying Company will have no obligations relating to the notes, and none of us, BAC, MLPF&S or BofAS will perform any due diligence procedures with respect to the Underlying Company in connection with this offering.
■While BAC and our other affiliates may from time to time own securities of the Underlying Company, we, BAC and our other affiliates do not control the Underlying Company, and have not verified any disclosure made by any other company.
■Payment on the notes will not be adjusted for all corporate events that could affect the Underlying Stock. See “Description of the Notes—Anti-Dilution Adjustments Relating to Underlying Stocks” beginning on PS-41 of product supplement EQUITY MLI-1.
Tax-related Risks
■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-48 of the accompanying product supplement.
Accelerated Return Notes® |
|
The Underlying Stock
We have derived the following information from publicly available documents. We have not independently verified the accuracy or
completeness of the following information.
Because the Underlying Stock is registered under the Securities Exchange Act of 1934, as amended, the Underlying Company is
required to file periodically certain financial and other information specified by the SEC. Information provided to or filed with the SEC
by the Underlying Company can be located through the SEC’s website at https://www.sec.gov by reference to the CIK number set forth below.
This term sheet relates only to the notes and does not relate to the Underlying Stock or to any other securities of the Underlying
Company. None of us, BAC, MLPF&S, BofAS or any of our respective affiliates has participated or will participate in the preparation of the Underlying Company’s publicly available documents. None of us, BAC, MLPF&S, BofAS or any of our respective affiliates has made any due diligence inquiry with respect to the Underlying Company in connection with the offering of the notes. None of us, BAC, MLPF&S, BofAS or any of our respective affiliates makes any representation that the publicly available documents or any other publicly available information regarding the Underlying Company are accurate or complete. Furthermore, there can be no assurance that all events occurring prior to the date of this term sheet, including events that would affect the accuracy or completeness of these publicly
available documents that would affect the trading price of the Underlying Stock, have been or will be publicly disclosed. Subsequent
disclosure of any events or the disclosure of or failure to disclose material future events concerning the Underlying Company could
affect the value of the Underlying Stock and therefore could affect your return on the notes. The selection of the Underlying Stock is
not a recommendation to buy or sell the Underlying Stock.
Common Stock of Amazon.com, Inc.
Amazon.com, Inc. is an online retailer that offers a wide range of products. The company’s products include books, music, computers, electronics and numerous other products. The company offers personalized shopping services, Web-based credit card payment, and direct shipping to customers. The company also operates a cloud platform offering services globally. This Underlying Stock trades on the Nasdaq Global Select Market under the symbol "AMZN." The company's CIK number is 0001018724.
The following graph shows the daily historical performance of the Underlying Stock on its primary exchange in the period from January 1, 2016 through April 30, 2026. We obtained this historical data from Bloomberg L.P. We have not independently verified the accuracy or completeness of the information obtained from Bloomberg L.P. On April 30, 2026, the Closing Market Price of the Underlying Stock was $265.06. The graph below may have been adjusted to reflect certain corporate actions such as stock splits and reverse stock splits.
Historical Performance of the Underlying Stock
This historical data on the Underlying Stock is not necessarily indicative of the future performance of the Underlying Stock or what the value of the notes may be. Any historical upward or downward trend in the price of the Underlying Stock during any period set forth above is not an indication that the price of the Underlying Stock is more or less likely to increase or decrease at any time over the term of the notes.
Before investing in the notes, you should consult publicly available sources for the prices and trading pattern of the Underlying Stock.
Accelerated Return Notes® |
|
Supplement to the Plan of Distribution; Conflicts of Interest
Under our distribution agreement with BofAS, BofAS will purchase the notes from us as principal at the public offering price indicated on the cover of this term sheet, less the indicated underwriting discount.
MLPF&S will purchase the notes from BofAS for resale, and it will receive a discount in connection with the sale of the notes in an amount up to the full amount of underwriting discount set forth on the cover of this term sheet.
We will pay a fee to LFT Securities, LLC for providing certain electronic platform services with respect to this offering, which will reduce the economic terms of the notes to you. An affiliate of BofAS has an ownership interest in LFT Securities, LLC.
MLPF&S and BofAS, each a broker-dealer subsidiary of BAC, are members of the Financial Industry Regulatory Authority, Inc. (“FINRA”) and will participate as selling agent, in the case of BofAS, and as dealer, in the case of MLPF&S, in the distribution of the notes. Accordingly, offerings of the notes will conform to the requirements of Rule 5121 applicable to FINRA members. Neither BofAS nor MLPF&S may make sales in this offering to any of its discretionary accounts without the prior written approval of the account holder.
We may deliver the notes against payment therefor in New York, New York on a date that is greater than one business day following the pricing date. Under Rule 15c6-1 of the Securities Exchange Act of 1934, trades in the secondary market generally are required to settle in one business day, unless the parties to any such trade expressly agree otherwise. Accordingly, if the initial settlement of the notes occurs more than one business day from the pricing date, purchasers who wish to trade the notes more than one business day prior to the original issue date will be required to specify alternative settlement arrangements to prevent a failed settlement.
The notes will not be listed on any securities exchange. In the original offering of the notes, the notes will be sold in minimum investment amounts of 10,000 units. If you place an order to purchase the notes, you are consenting to MLPF&S and/or one of its affiliates acting as a principal in effecting the transaction for your account.
MLPF&S and BofAS may repurchase and resell the notes, with repurchases and resales being made at prices related to then-prevailing market prices or at negotiated prices, and these will include MLPF&S’s and BofAS’s trading commissions and mark-ups or mark-downs. MLPF&S and BofAS may act as principal or agent in these market-making transactions; however, neither is obligated to engage in any such transactions. At their discretion, for a short, undetermined initial period after the issuance of the notes, MLPF&S and BofAS may offer to buy the notes in the secondary market at a price that may exceed the initial estimated value of the notes. Any price offered by MLPF&S or BofAS for the notes will be based on then-prevailing market conditions and other considerations, including the performance of the Underlying Stock and the remaining term of the notes. However, neither we nor any of our affiliates is obligated to purchase your notes at any price, or at any time, and we cannot assure you that we or any of our affiliates will purchase your notes at a price that equals or exceeds the initial estimated value of the notes.
The value of the notes shown on your account statement will be based on BofAS’s estimate of the value of the notes if BofAS or another of our affiliates were to make a market in the notes, which it is not obligated to do. That estimate will be based upon the price that BofAS may pay for the notes in light of then-prevailing market conditions and other considerations, as mentioned above, and will include transaction costs. At certain times, this price may be higher than or lower than the initial estimated value of the notes.
An investor’s household, as referenced on the cover of this term sheet, will generally include accounts held by any of the following, as determined by MLPF&S in its discretion and acting in good faith based upon information then available to MLPF&S:
●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.
Purchases in retirement accounts will not be considered part of the same household as an individual investor’s personal or other non-retirement account, except for individual retirement accounts (“IRAs”), simplified employee pension plans (“SEPs”), savings incentive match plan for employees (“SIMPLEs”), and single-participant or owners only accounts (i.e., retirement accounts held by self-employed individuals, business owners or partners with no employees other than their spouses).
Please contact your MLPF&S financial advisor if you have any questions about the application of these provisions to your specific circumstances or think you are eligible.
Accelerated Return Notes® |
|
Structuring the Notes
The notes are our debt securities, the return on which is linked to the performance of the Underlying Stock. The related guarantees are BAC’s obligations. As is the case for all of our debt securities, including our and BAC’s respective market-linked notes, the economic terms of the notes reflect our and BAC’s actual or perceived creditworthiness at the time of pricing. In addition, because market-linked notes result in increased operational, funding and liability management costs to us and BAC, BAC typically borrows the funds under these types of notes at a rate that is more favorable to BAC than the rate that it might pay for a conventional fixed or floating rate debt security. This rate, which we refer to in this term sheet as BAC’s internal funding rate, is typically lower than the rate BAC would pay when it issues conventional fixed or floating rate debt securities. This generally relatively lower internal funding rate, which is reflected in the economic terms of the notes, along with the fees and charges associated with market-linked notes, typically results in the initial estimated value of the notes on the pricing date being less than their public offering price.
At maturity, we are required to pay the Redemption Amount to holders of the notes, which will be calculated based on the performance of the Underlying Stock and the $10 per unit principal amount. In order to meet these payment obligations, at the time we issue the notes, we may choose to enter into certain hedging arrangements (which may include call options, put options or other derivatives) with BofAS or one of our other affiliates. The terms of these hedging arrangements are determined by seeking bids from market participants, including BofAS and its affiliates, and take into account a number of factors, including our and BAC’s creditworthiness, interest rate movements, the volatility of the Underlying Stock, the tenor of the notes and the tenor of the hedging arrangements. The economic terms of the notes and their initial estimated value depend in part on the terms of these hedging arrangements. These hedging arrangements are expected to result in a profit to those engaging in the hedging activity, which could be more or less than initially expected, but could also result in a loss.
For further information, see “Risk Factors” beginning on page PS-4 and “Use of Proceeds” on page PS-23 of the accompanying product supplement.
Accelerated Return Notes® |
|
Summary Tax Consequences
You should consider the U.S. federal income tax consequences of an investment in the notes, including the following:
■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 Underlying Stock.
■Under this characterization and tax treatment of the notes, a U.S. Holder (as defined on page 76 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 Internal Revenue Service (“IRS”) or any court will agree with this characterization and tax treatment.
■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.
You should consult your own tax advisor concerning the U.S. federal income tax consequences to you of acquiring, owning, and disposing of the notes, as well as any tax consequences arising under the laws of any state, local, foreign, or other tax jurisdiction and the possible effects of changes in U.S. federal or other tax laws. You should review carefully the discussion under the section entitled “U.S. Federal Income Tax Summary” beginning on page PS-48 of the accompanying product supplement.
Where You Can Find More Information
We and BAC have filed a registration statement (including a product supplement, a prospectus supplement and a prospectus) with the SEC for the offering to which this term sheet relates. Before you invest, you should read the Note Prospectus, including this term sheet, and the other documents relating to this offering that we and BAC have filed with the SEC, for more complete information about us, BAC and this offering. You may get these documents without cost by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, we, any agent or any dealer participating in this offering will arrange to send you these documents if you so request by calling MLPF&S or BofAS toll-free at 1-800-294-1322.
“Accelerated Return Notes®” and “ARNs®” are BAC’s registered service marks.