Linked to the Common Stock of Apple
Inc.
|
•
|
Approximate
2 year term if not called prior to maturity.
|
|
•
|
Payments
on the Notes will depend on the performance of the common stock of Apple Inc. (the “Underlying Stock”).
|
|
•
|
Contingent
coupon rate of 9.25% per annum (2.3125% per quarter) payable quarterly if the Observation Value of the Underlying Stock on the
applicable Observation Date is greater than or equal to 70% of the Starting Value.
|
|
•
|
Beginning
on May 25, 2021, callable quarterly at our option for an amount equal to the principal amount plus the relevant contingent coupon,
if otherwise payable.
|
|
•
|
Assuming
the Notes are not called prior to maturity, if the Underlying Stock declines by more than 30% from the Starting Value, at maturity
your investment will be subject to a 1:1 downside, with up to 100% of the principal at risk; otherwise, at maturity investors will
receive the principal amount. At maturity the investor will also receive the final contingent coupon if the Observation Value of
the Underlying Stock on the final Observation Date is greater than or equal to 70% of its Starting Value.
|
|
•
|
All
payments on the Notes are subject to the credit risk of BofA Finance LLC (“BofA Finance”) and Bank of America Corporation
(“BAC” or the “Guarantor”).
|
|
•
|
The
Notes priced on November 20, 2020, will issue on November 25, 2020 and will mature on November 25, 2022.
|
|
•
|
The
Notes will not be listed on any securities exchange.
|
The initial estimated value of the Notes as of the pricing date is $974.50 per $1,000.00 in principal amount of Notes, which
is less than the public offering price listed below. The actual value of your Notes at any time will reflect many factors and
cannot be predicted with accuracy. See “Risk Factors” beginning on page PS-8 of this pricing supplement and “Structuring
the Notes” on page PS-15 of this pricing supplement for additional information. Potential purchasers of the Notes should
consider the information in “Risk Factors” beginning on page PS-8 of this pricing supplement, page PS-5 of the accompanying
product supplement, page S-5 of the accompanying prospectus supplement, and page 7 of the accompanying prospectus.
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 on page PS-19) is truthful or complete.
Any representation to the contrary is a criminal offense.
|
Public offering price (1)
|
Underwriting discount (1)
|
Proceeds, before expenses, to BofA Finance
|
Per Note
|
$1,000.00
|
$17.50
|
$982.50
|
Total
|
$8,987,000.00
|
$157,272.50
|
$8,829,727.50
|
(1) Certain dealers who purchase
the Notes for sale to certain fee-based advisory accounts may forgo some or all of their selling concessions, fees or commissions.
The public offering price for investors purchasing the Notes in these fee-based advisory accounts may be as low as $982.50 per
$1,000 in principal amount of Notes.
The Notes and the related
guarantee:
Are Not FDIC Insured
|
Are Not Bank Guaranteed
|
May Lose Value
|
Selling Agent
Contingent Income Issuer Callable Yield Notes Linked to the Common Stock of Apple Inc.
Terms of the Notes
The
Contingent Income Issuer Callable Yield Notes Linked to the Common Stock of Apple Inc. (the “Notes”) provide a quarterly
Contingent Coupon Payment of $23.125 on the applicable Contingent Payment Date if, on any quarterly Observation Date, the Observation
Value of the Underlying Stock is greater than or equal to the Coupon Barrier. Prior to the maturity date, beginning on May 25,
2021, and on each quarterly Call Date thereafter, we have the right to redeem all, but not less than all, of the Notes at 100%
of the principal amount, together with the relevant Contingent Coupon Payment, if otherwise payable. No further amounts will be
payable following an Optional Early Redemption. If the Notes are not called prior to maturity and the Underlying Stock declines
by more than 30% from the Starting Value, there is full exposure to declines in the Underlying Stock, and you
will lose a significant portion or all of your investment in the Notes. Otherwise, at maturity
you will receive the principal amount. At maturity you will also receive the final Contingent Coupon Payment if the Observation
Value of the Underlying Stock on the final Observation Date is greater than or equal to its Coupon Barrier. The Notes are not traditional
debt securities and it is possible that the Notes will not pay any Contingent Coupon Payments, and you may lose a significant portion
or all of your principal amount at maturity. Any payments on the Notes will be calculated based on $1,000 in principal amount of
Notes and will depend on the performance of the Underlying Stock, subject to our and BAC’s credit risk.
Issuer:
|
BofA Finance
|
Guarantor:
|
BAC
|
Denominations:
|
The Notes will be issued in minimum denominations of $1,000 and whole multiples of $1,000 in excess thereof.
|
Term:
|
Approximately 2 years, unless previously called.
|
Underlying Stock:
|
The common stock of Apple Inc. (Nasdaq Global Select Market symbol: “AAPL”).
|
Pricing Date:
|
November 20, 2020
|
Issue Date:
|
November 25, 2020
|
Valuation Date:
|
November 21, 2022, subject to postponement as described under “Description of the Notes—Certain Terms of the Notes—Events Relating to Observation Dates” in the accompanying product supplement.
|
Maturity Date:
|
November 25, 2022
|
Starting Value:
|
AAPL: $117.34
|
Observation Value:
|
The Closing Market Price of the Underlying Stock on the applicable Observation Date multiplied by its Price Multiplier, as determined by the calculation agent.
|
Ending Value:
|
The Observation Value of the Underlying Stock on the Valuation Date, as determined by the calculation agent.
|
Coupon Barrier:
|
$82.14, which is 70% of the Starting Value (rounded to two decimal places).
|
Threshold Value:
|
$82.14, which is 70% of the Starting Value (rounded to two decimal places).
|
Price Multiplier:
|
1, subject to adjustment for certain corporate events relating to the Underlying Stock described under “Description of the Notes—Anti-Dilution Adjustments” beginning on page PS-23 of the accompanying product supplement.
|
Contingent Coupon Payment:
|
If, on any quarterly Observation Date, the Observation Value is greater than or equal to the Coupon Barrier, we will pay a Contingent Coupon Payment of $23.125 per $1,000 in principal amount of Notes (equal to a rate of 2.3125% per quarter or 9.25% per annum) on the applicable Contingent Payment Date (including the Maturity Date).
|
Optional Early Redemption:
|
On any Call Date,
we have the right to redeem all (but not less than all) of the Notes at the Early Redemption Amount. No further amounts will be
payable following an Optional Early Redemption. We will give notice to the trustee at least five business days but not more than
60 calendar days before the applicable Call Date.
|
Early Redemption Amount:
|
For each $1,000 in principal amount of Notes, $1,000. The Early Redemption Amount will also include the applicable Contingent Coupon Payment if the Observation Value of the Underlying Stock on the corresponding Observation Date is greater than or equal to its Coupon Barrier.
|
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-2
|
Contingent Income Issuer Callable Yield Notes Linked to the Common Stock of Apple Inc.
Redemption Amount:
|
If the Notes have
not been called prior to maturity, the Redemption Amount per $1,000 in principal amount of Notes will be:
a)
If the Ending Value is greater than or equal to
the Threshold Value:
$1,000; or
b)
If the Ending Value is less than the Threshold
Value:
$1,000 + ($1,000
x the Underlying Stock Return)
In
this case, the Redemption Amount will be less than 70% of the principal amount and could be zero.
The Redemption
Amount will also include the final Contingent Coupon Payment if the Ending Value is greater than or equal to the Coupon Barrier.
|
Observation Dates:
|
As set forth on page PS-4.
|
Contingent Payment Dates:
|
As set forth on page PS-4.
|
Call Dates:
|
The Contingent Payment Dates occurring quarterly beginning on May 25, 2021 and ending on August 25, 2022.
|
Calculation Agent:
|
BofA Securities, Inc. (“BofAS”), an affiliate of BofA Finance.
|
Selling Agent:
|
BofAS
|
CUSIP:
|
09709T2Q3
|
Underlying Stock Return:
|
|
Events of Default and Acceleration:
|
If an Event of Default, as defined in the senior indenture relating to the Notes and in the section entitled “Description of Debt Securities—Events of Default and Rights of Acceleration” beginning on page 22 of the accompanying prospectus, with respect to the Notes 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 amount described under the caption “Redemption Amount” above, calculated as though the date of acceleration were the Maturity Date of the Notes and as though the Valuation Date were the third trading day prior to the date of acceleration. We will also determine whether the final Contingent Coupon Payment is payable based upon the price of the Underlying Stock on the deemed Valuation Date; any such final Contingent Coupon Payment will be prorated by the calculation agent to reflect the length of the final contingent payment period. In case of a default in the payment of the Notes, whether at their maturity or upon acceleration, the Notes will not bear a default interest rate.
|
|
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-3
|
Contingent Income Issuer Callable Yield Notes Linked to the Common Stock of Apple Inc.
Observation
Dates and Contingent Payment Dates
Observation Dates*
|
|
Contingent Payment Dates
|
|
February 22, 2021
|
|
February 25, 2021
|
|
May 20, 2021
|
|
May 25, 2021
|
|
August 20, 2021
|
|
August 25, 2021
|
|
November 22, 2021
|
|
November 26, 2021
|
|
February 22, 2022
|
|
February 25, 2022
|
|
May 20, 2022
|
|
May 25, 2022
|
|
August 22, 2022
|
|
August 25, 2022
|
|
November 21, 2022 (the “Valuation Date”)
|
|
November 25, 2022 (the “Maturity Date”)
|
|
* The Observation Dates are subject
to postponement as set forth in “Description of the Notes—Certain Terms of the Notes—Events Relating to Observation
Dates” on page PS-21 of the accompanying product supplement.
Any payments on the Notes
depend on the credit risk of BofA Finance, as Issuer, and BAC, as Guarantor, and on the performance of the Underlying Stock. The
economic terms of the Notes 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 affiliates enter
into. 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 the hedging related charges described
below (see “Risk Factors” beginning on page PS-8), reduced the economic
terms of the Notes to you and the initial estimated value of the Notes. Due to these factors, the public offering price you are
paying to purchase the Notes is greater than the initial estimated value of the Notes as of the pricing date.
The initial estimated
value of the Notes as of the pricing date is set forth on the cover page of this pricing supplement. For more information about
the initial estimated value and the structuring of the Notes, see “Risk Factors” beginning on page PS-8 and “Structuring
the Notes” on page PS-15.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-4
|
Contingent Income Issuer Callable Yield Notes Linked to the Common Stock of Apple Inc.
Contingent Coupon Payment and Redemption
Amount Determination
On each Contingent Payment
Date, you may receive a Contingent Coupon Payment per $1,000 in principal amount of Notes determined as follows:
Assuming the Notes have not
been previously called, on the Maturity Date, you will receive a cash payment per $1,000 in principal amount of Notes determined
as follows:
All payments described above
are subject to Issuer and Guarantor credit risk.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-5
|
Contingent Income Issuer Callable Yield Notes Linked to the Common Stock of Apple Inc.
Total Contingent Coupon Payment Examples
The
table below illustrates the hypothetical total Contingent Coupon Payments per $1,000 in principal amount of Notes over the term
of the Notes, based on the Contingent Coupon Payment of $23.125, depending on how many Contingent Coupon Payments are payable prior
to an Optional Early Redemption or maturity. Depending on the performance of the Underlying Stock, you may not receive any Contingent
Coupon Payments during the term of the Notes.
Number of Contingent Coupon Payments
|
Total Contingent Coupon Payments
|
0
|
$0.00
|
2
|
$46.25
|
4
|
$92.50
|
6
|
$138.75
|
8
|
$185.00
|
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-6
|
Contingent Income Issuer Callable Yield Notes Linked to the Common Stock of Apple Inc.
Hypothetical Payout Profile and Examples
of Payments at Maturity
Contingent Income Issuer Callable
Yield Notes Table
The following table is
for purposes of illustration only. It assumes the Notes have not been called prior to maturity
and is based on hypothetical values and shows hypothetical returns on the Notes. The table illustrates the
calculation of the Redemption Amount and the return on the Notes based on a hypothetical Starting Value of 100, a hypothetical
Coupon Barrier of 70, a hypothetical Threshold Value of 70, the Contingent Coupon Payment of $23.125 per $1,000 in principal amount
of Notes and a range of hypothetical Ending Values. The actual amount you receive and the resulting return will depend on the
actual Starting Value, Coupon Barrier, Threshold Value, Observation Values and Ending Value, whether the Notes are called prior
to maturity, 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 Underlying Stock, 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
directly. In addition, all payments on the Notes are subject to Issuer and Guarantor credit risk.
Ending Value
|
Underlying Stock Return
|
Redemption Amount per Note (including any final Contingent Coupon Payment)
|
Return
on the Notes(1)
|
160.00
|
60.00%
|
$1,023.125(2)
|
2.3125%
|
150.00
|
50.00%
|
$1,023.125
|
2.3125%
|
140.00
|
40.00%
|
$1,023.125
|
2.3125%
|
130.00
|
30.00%
|
$1,023.125
|
2.3125%
|
120.00
|
20.00%
|
$1,023.125
|
2.3125%
|
110.00
|
10.00%
|
$1,023.125
|
2.3125%
|
105.00
|
5.00%
|
$1,023.125
|
2.3125%
|
102.00
|
2.00%
|
$1,023.125
|
2.3125%
|
100.00(3)
|
0.00%
|
$1,023.125
|
2.3125%
|
90.00
|
-10.00%
|
$1,023.125
|
2.3125%
|
70.00(4)
|
-30.00%
|
$1,023.125
|
2.3125%
|
69.99
|
-30.01%
|
$699.900
|
-30.0100%
|
60.00
|
-40.00%
|
$600.000
|
-40.0000%
|
50.00
|
-50.00%
|
$500.000
|
-50.0000%
|
30.00
|
-70.00%
|
$300.000
|
-70.0000%
|
0.00
|
-100.00%
|
$0.000
|
-100.0000%
|
|
(1)
|
The “Return on the
Notes” is calculated based on the Redemption Amount and potential final Contingent Coupon Payment, not including any Contingent
Coupon Payments paid prior to maturity.
|
|
(2)
|
This amount represents
the sum of the principal amount and the final Contingent Coupon Payment.
|
|
(3)
|
The hypothetical
Starting Value of 100 used in the table above has been chosen for
illustrative purposes only. The actual Starting Value for the Underlying Stock is set
forth on page PS-2 above.
|
|
(4)
|
This is the hypothetical
Coupon Barrier and Threshold Value.
|
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-7
|
Contingent Income Issuer Callable Yield Notes Linked to the Common Stock of Apple Inc.
Risk Factors
Your investment in the Notes
entails significant risks, many of which differ from those of a conventional debt security. Your decision to purchase the Notes
should be made only after carefully considering the risks of an investment in the Notes, including those discussed below, with
your advisors in light of your particular circumstances. The Notes are not an appropriate investment for you if you are not knowledgeable
about significant elements of the Notes or financial matters in general. You should carefully review the more detailed explanation
of risks relating to the Notes in the “Risk Factors” sections beginning on page PS-5 of the accompanying product supplement,
page S-5 of the accompanying prospectus supplement and page 7 of the accompanying prospectus, each as identified on page PS-19
below.
Structure-related
Risks
|
•
|
Your investment may
result in a loss; there is no guaranteed return of principal. There is no fixed principal repayment amount on the Notes at
maturity. If the Notes are not called prior to maturity and the Ending Value is less than the Threshold Value, at maturity you
will lose 1% of the principal amount for each 1% that the Ending Value is less than the Starting Value. In that case, you will
lose a significant portion or all of your investment in the Notes.
|
|
•
|
Your return on the
Notes is limited to the return represented by the Contingent Coupon Payments, if any, over the term of the Notes. Your return
on the Notes is limited to the Contingent Coupon Payments paid over the term of the Notes, regardless of the extent to which the
Observation Value or Ending Value exceeds the Coupon Barrier or Starting Value, as applicable. Similarly, the amount payable at
maturity or upon an Optional Early Redemption will never exceed the sum of the principal amount and the applicable Contingent Coupon
Payment, regardless of the extent to which the Observation Value exceeds the Starting Value. In contrast, a direct investment in
the Underlying Stock would allow you to receive the benefit of any appreciation in its price. Thus, any return on the Notes will
not reflect the return you would realize if you actually owned shares of the Underlying Stock and received the dividends paid or
distributions made on them.
|
|
•
|
The Notes are subject
to Optional Early Redemption, which would limit your ability to receive the Contingent Coupon Payments over the full term of the
Notes. On each Call Date, at our option, we may redeem your Notes in whole, but not in part. If the Notes are redeemed prior
to the Maturity Date, you will be entitled to receive the Early Redemption Amount. In this case, you will lose the opportunity
to continue to receive Contingent Coupon Payments after the date of the Optional Early Redemption. If the Notes are redeemed prior
to the Maturity Date, you may be unable to invest in other securities with a similar level of risk that could provide a return
that is similar to the Notes. Even if we do not exercise our option to redeem your Notes, our ability to do so may adversely affect
the market value of your Notes. It is our sole option whether to redeem your Notes prior to maturity on any such Call Date and
we may or may not exercise this option for any reason. Because of this Optional Early Redemption potential, the term of your Notes
could be anywhere between six months and two years.
|
|
•
|
You may not receive
any Contingent Coupon Payments. The Notes do not provide for any regular fixed coupon payments. Investors in the Notes will
not necessarily receive any Contingent Coupon Payments on the Notes. If the Observation Value is less than the Coupon Barrier on
an Observation Date, you will not receive the Contingent Coupon Payment applicable to that Observation Date. If the Observation
Value is less than the Coupon Barrier on all the Observation Dates during the term of the Notes, you will not receive any Contingent
Coupon Payment during the term of the Notes, and will not receive a positive return on the Notes.
|
|
•
|
The Contingent Coupon
Payment, Early Redemption Amount or Redemption Amount, as applicable, will not reflect the price of the Underlying Stock other
than on the Observation Dates. The price of the Underlying Stock during the term of the Notes other than on the Observation
Dates will not affect payments on the Notes. Notwithstanding the foregoing, investors should generally be aware of the performance
of the Underlying Stock while holding the Notes. The calculation agent will determine whether each Contingent Coupon Payment is
payable and will calculate the Early Redemption Amount or the Redemption Amount, as applicable, by comparing only the Starting
Value, the Coupon Barrier or the Threshold Value, as applicable, to the Observation Value or the Ending Value. No other price of
the Underlying Stock will be taken into account. As a result, if the Notes are not called prior to maturity, and the Ending Value
is less than the Threshold Value, you will receive less than the principal amount at maturity even if the price of the Underlying
Stock was always above the Threshold Value prior to the Valuation Date.
|
|
•
|
Your return on the Notes may be less
than the yield on a conventional debt security of comparable maturity. Any return that you receive on the Notes may be less
than the return you would earn if you purchased a conventional debt security with the same Maturity Date. As a result, your investment
in the Notes may not reflect the full opportunity cost to you when you consider factors, such as inflation, that affect the time
value of money. In addition, if interest rates increase during the term of the Notes, the Contingent Coupon Payment (if any) may
be less than the yield on a conventional debt security of comparable maturity.
|
|
•
|
Any payment on the
Notes is subject to the credit risk of BofA Finance and the Guarantor, and actual or perceived changes in BofA Finance’s
or the Guarantor’s creditworthiness are expected to affect the value of the Notes. The Notes are our senior unsecured
debt securities. Any payment on the Notes will be fully and unconditionally guaranteed by the Guarantor. The Notes are not guaranteed
by any entity other than the Guarantor. As a result, your receipt of the Early Redemption Amount or the Redemption Amount at maturity,
as applicable, will be dependent upon our ability and the ability of the Guarantor to repay our respective obligations under the
Notes on the applicable Contingent Payment Date, Call Date or the Maturity Date, regardless of the Ending Value as compared to
the Starting Value.
|
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-8
|
Contingent Income Issuer Callable Yield Notes Linked to the Common Stock of Apple Inc.
In addition, our credit
ratings and the credit ratings of the Guarantor are assessments by ratings agencies of our respective abilities to pay our obligations.
Consequently, our or the Guarantor’s perceived creditworthiness and actual or anticipated decreases in our or the Guarantor’s
credit ratings or increases in the spread between the yield on our respective securities and the yield on U.S. Treasury securities
(the “credit spread”) prior to the Maturity Date of your Notes may adversely affect the market value of the Notes.
However, because your return on the Notes depends upon factors in addition to our ability and the ability of the Guarantor to pay
our respective obligations, such as the price of the Underlying Stock, an improvement in our or the Guarantor’s credit ratings
will not reduce the other investment risks related to the Notes.
|
•
|
We are a finance
subsidiary and, as such, have no independent assets, operations or revenues. We are a finance subsidiary of BAC, have no operations
other than those related to the issuance, administration and repayment of our debt securities that are guaranteed by the Guarantor,
and are dependent upon the Guarantor and/or its other subsidiaries to meet our obligations under the Notes in the ordinary course.
Therefore, our ability to make payments on the Notes may be limited.
|
Valuation-
and Market-related Risks
|
•
|
The public offering
price you are paying for the Notes exceeds their initial estimated value. The initial estimated value of the Notes that is
provided on the cover page of this pricing supplement is an estimate only, determined as of the pricing date by reference to our
and our affiliates’ pricing models. These pricing models consider certain assumptions and variables, including our credit
spreads and those of the Guarantor, the Guarantor’s internal funding rate, mid-market terms on hedging transactions, expectations
on interest rates, dividends 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. 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 their initial estimated value. This
is due to, among other things, changes in the price of the Underlying Stock, changes in the Guarantor’s internal funding
rate, and the inclusion in the public offering price of the underwriting discount and the hedging related charges, all as further
described in "Structuring the Notes" below. 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, 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.
|
|
•
|
We cannot assure
you that a trading market for your Notes will ever develop or be maintained. We will not list the Notes on any securities exchange.
We cannot predict how the Notes will trade in any secondary market or whether that market will be liquid or illiquid.
|
Conflict-related Risks
|
•
|
Trading and hedging activities by us, the Guarantor
and any of our other affiliates, including BofAS, may create conflicts of interest with you and may affect your return on the Notes
and their market value. We, the Guarantor or one or more of our other affiliates, including BofAS, may buy or sell shares of
the Underlying Stock, or futures or options contracts on the Underlying Stock, or other listed or over-the-counter derivative instruments
linked to the Underlying Stock. We, the Guarantor or one or more of our other affiliates, including BofAS, may execute such purchases
or sales for our own or their own accounts, for business reasons, or in connection with hedging our obligations under the Notes.
These transactions may present a conflict of interest between your interest in the Notes and the interests we, the Guarantor and
our other affiliates, including BofAS, may have in our or their proprietary accounts, in facilitating transactions, including block
trades, for our or their other customers, and in accounts under our or their management. These transactions may adversely affect
the price of the Underlying Stock in a manner that could be adverse to your investment in the Notes. On or before the pricing date,
any purchases or sales by us, the Guarantor or our other affiliates, including BofAS or others on its behalf (including for the
purpose of hedging some or all of our anticipated exposure in connection with the Notes), may have affected the price of the Underlying
Stock. Consequently, the price of the Underlying Stock may change subsequent to the pricing date, which may adversely affect the
market value of the Notes.
|
We, the Guarantor or one or
more of our other affiliates, including BofAS, may also have engaged in hedging activities that could have affected the price of
the Underlying Stock on the pricing date. In addition, these hedging activities, including the unwinding of a hedge, may decrease
the market value of your Notes prior to maturity, and may affect the amounts to be paid on the Notes. We, the Guarantor or one
or more of our other affiliates, including BofAS, may purchase or otherwise acquire a long or short position in the Notes and may
hold or resell the Notes. For example, BofAS may enter into these transactions in connection with any market making activities
in which it engages. We cannot assure you that these activities will not adversely affect the price of the Underlying Stock, the
market value of your Notes prior to maturity or the amounts payable on the Notes.
|
•
|
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. One of our affiliates will be the calculation agent for the Notes and, as such, will make a variety of determinations
relating to the Notes, including the amounts that will be paid on the Notes. Under some circumstances, these duties could result
in a conflict of interest between its status as our affiliate and its responsibilities as calculation agent.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-9
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Contingent Income Issuer Callable Yield Notes Linked to the Common Stock of Apple Inc.
Underlying Stock-related
Risks
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•
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The terms of the
Notes will not be adjusted for all corporate events that could affect the issuer of the Underlying Stock. The Price Multiplier,
the determination of the payments on the Notes, and other terms of the Notes may be adjusted for the specified corporate events
affecting the Underlying Stock, as described in the section entitled “Description of the Notes—Anti-Dilution Adjustments”
beginning on page PS-23 of the accompanying product supplement. However, these adjustments do not cover all corporate events
that could affect the market price of the Underlying Stock, such as offerings of common shares for cash or in connection with certain
acquisition transactions. The occurrence of any event that does not require the calculation agent to adjust the applicable Price
Multiplier or the amounts that may be paid on the Notes at maturity may adversely affect the price of the Underlying Stock, and,
as a result, the market value of the Notes.
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Tax-related Risks
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•
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The U.S. federal income tax consequences of an
investment in the Notes are uncertain, and may be adverse to a holder of the Notes. No statutory, judicial, or administrative
authority directly addresses the characterization of the Notes or securities similar to the Notes for U.S. federal income tax purposes.
As a result, significant aspects of the U.S. federal income tax consequences of an investment in the Notes are not certain. Under
the terms of the Notes, you will have agreed with us to treat the Notes as contingent income-bearing single financial contracts,
as described below under “U.S. Federal Income Tax Summary—General.” If the Internal Revenue Service (the “IRS”)
were successful in asserting an alternative characterization for the Notes, the timing and character of income, gain or loss with
respect to the Notes may differ. No ruling will be requested from the IRS with respect to the Notes and no assurance can be given
that the IRS will agree with the statements made in the section entitled “U.S. Federal Income Tax Summary.” You
are urged to consult with your own tax advisor regarding all aspects of the U.S. federal income tax consequences of investing in
the Notes.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-10
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Contingent Income Issuer Callable Yield Notes Linked to the Common Stock of Apple Inc.
The Underlying Stock
We
have derived the following information on the Underlying Stock and the company issuing the Underlying Stock (the “Underlying
Company”) from publicly available documents. Because the Underlying Stock is registered under the Securities Exchange Act
of 1934, 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 sec.gov
by reference to the CIK number set forth below.
This
document relates only to the offering of the Notes and does not relate to any offering of Underlying Stock or any other securities
of the Underlying Company. None of us, the Guarantor, BofAS or any of our other affiliates has made any due diligence inquiry with
respect to the Underlying Company in connection with the offering of the Notes. None of us, the Guarantor, BofAS or any of our
other affiliates has independently verified the accuracy or completeness of the publicly available documents or any other publicly
available information regarding the Underlying Company and hence makes no representation regarding the same. Furthermore, there
can be no assurance that all events occurring prior to the date of this document, including events that would affect the accuracy
or completeness of these publicly available documents that could affect the trading price of the Underlying Stock, have been or
will be publicly disclosed. Subsequent disclosure of any events or the disclosure or failure to disclose material future events
concerning the Underlying Company could affect the price of the applicable 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.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-11
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Contingent Income Issuer Callable Yield Notes Linked to the Common Stock of Apple Inc.
Apple Inc.
Apple Inc. designs, manufactures and markets
personal computers and related personal computing and mobile communication devices along with a variety of related software, services,
peripherals and networking solutions. The Underlying Stock trades on the NASDAQ Global Select Market (the “Nasdaq”)
under the symbol “AAPL” The company’s CIK number is 0000320193.
Historical Performance of AAPL
The following graph sets forth the daily historical
performance of AAPL in the period from January 1, 2008 through the pricing date. 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. The graph
below may have been adjusted to reflect certain corporate actions, such as stock splits and reverse stock splits. The horizontal
line in the graph represents AAPL’s Coupon Barrier and Threshold Value of $82.14 (rounded to
two decimal places), which is 70% of AAPL’s Starting Value of $117.34.
This historical data on AAPL is not necessarily
indicative of the future performance of AAPL or what the value of the Notes may be. Any historical upward or downward trend in
the Closing Market Price of AAPL during any period set forth above is not an indication that the Closing Market Price of AAPL 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 Closing Market Prices and trading pattern of AAPL.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-12
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Contingent Income Issuer Callable Yield Notes Linked to the Common Stock of Apple Inc.
Supplement to the Plan of Distribution; Role
of BofAS and Conflicts of Interest
BofAS, a broker-dealer affiliate
of ours, is a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”) and will participate as selling
agent in the distribution of the Notes. Accordingly, the offering of the Notes will conform to the requirements of FINRA Rule 5121.
BofAS may not make sales in this offering to any of its discretionary accounts without the prior written approval of the account
holder.
We will deliver the Notes
against payment therefor in New York, New York on a date that is greater than two business days 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 two business
days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade the Notes more
than two business days prior to the original issue date will be required to specify alternative settlement arrangements to prevent
a failed settlement.
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 pricing
supplement, less the indicated underwriting discount. BofAS will sell the Notes to other broker-dealers that will participate in
the offering and that are not affiliated with us, at an agreed discount to the principal amount. Each of those broker-dealers may
sell the Notes to one or more additional broker-dealers. BofAS has informed us that these discounts may vary from dealer to dealer
and that not all dealers will purchase or repurchase the Notes at the same discount. Certain dealers who purchase the Notes for
sale to certain fee-based advisory accounts may forgo some or all of their selling concessions, fees or commissions. The public
offering price for investors purchasing the Notes in these fee-based advisory accounts may be as low as $982.50 per $1,000 in principal
amount of the Notes.
BofAS and any of our other
broker-dealer affiliates may use this pricing supplement and the accompanying product supplement, prospectus supplement and prospectus
for offers and sales in secondary market transactions and market-making transactions in the Notes. However, they are not obligated
to engage in such secondary market transactions and/or market-making transactions. The selling agent may act as principal or agent
in these transactions, and any such sales will be made at prices related to prevailing market conditions at the time of the sale.
At BofAS’s discretion,
for a short, undetermined initial period after the issuance of the Notes, 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 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, none of us, the Guarantor, BofAS or any of our other affiliates is obligated to purchase your Notes
at any price or at any time, and we cannot assure you that any party will purchase your Notes at a price that equals or exceeds
the initial estimated value of the Notes.
Any price that BofAS may pay
to repurchase the Notes will depend upon then prevailing market conditions, the creditworthiness of us and the Guarantor, and transaction
costs. At certain times, this price may be higher than or lower than the initial estimated value of the Notes.
European Economic Area and
United Kingdom
None of this pricing supplement,
the accompanying product supplement, the accompanying prospectus or the accompanying prospectus supplement is a prospectus for
the purposes of the Prospectus Regulation (as defined below). This pricing supplement, the accompanying product supplement, the
accompanying prospectus and the accompanying prospectus supplement have been prepared on the basis that any offer of Notes in any
Member State of the European Economic Area (the “EEA”) or in the United Kingdom (each, a “Relevant State”)
will only be made to a legal entity which is a qualified investor under the Prospectus Regulation (“Qualified Investors”).
Accordingly any person making or intending to make an offer in that Relevant State of Notes which are the subject of the offering
contemplated in this pricing supplement, the accompanying product supplement, the accompanying prospectus and the accompanying
prospectus supplement may only do so with respect to Qualified Investors. Neither BofA Finance nor BAC has authorized, nor does
it authorize, the making of any offer of Notes other than to Qualified Investors. The expression “Prospectus Regulation”
means Regulation (EU) 2017/1129.
PROHIBITION OF SALES TO
EEA AND UNITED KINGDOM RETAIL INVESTORS – The Notes are not intended to be offered, sold or otherwise made available
to and should not be offered, sold or otherwise made available to any retail investor in the EEA or in the United Kingdom. For
these purposes: (a) a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article
4(1) of Directive 2014/65/EU, as amended (“MiFID II”); or (ii) a customer within the meaning of Directive (EU) 2016/97
(the Insurance Distribution Directive), where that customer would not qualify as a professional client as defined in point (10)
of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in the Prospectus Regulation; and (b) the expression
“offer” includes the communication in any form and by any means of sufficient information on the terms of the offer
and the Notes to be offered so as to enable an investor to decide to purchase or subscribe for the Notes. Consequently no key information
document required by Regulation (EU) No 1286/2014, as amended (the “PRIIPs Regulation”) for offering or selling the
Notes or otherwise making them available to retail investors in the EEA or in the United Kingdom has been prepared and therefore
offering or selling the Notes or otherwise making them available to any retail investor in the EEA or in the United Kingdom may
be unlawful under the PRIIPs Regulation.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-13
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Contingent Income Issuer Callable Yield Notes Linked to the Common Stock of Apple Inc.
United Kingdom
The communication of this
pricing supplement, the accompanying product supplement, the accompanying prospectus supplement, the accompanying prospectus and
any other document or materials relating to the issue of the Notes offered hereby is not being made, and such documents and/or
materials have not been approved, by an authorized person for the purposes of section 21 of the United Kingdom’s Financial
Services and Markets Act 2000, as amended (the “FSMA”). Accordingly, such documents and/or materials are not being
distributed to, and must not be passed on to, the general public in the United Kingdom. The communication of such documents and/or
materials as a financial promotion is only being made to those persons in the United Kingdom who have professional experience in
matters relating to investments and who fall within the definition of investment professionals (as defined in Article 19(5) of
the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Financial Promotion Order”)),
or who fall within Article 49(2)(a) to (d) of the Financial Promotion Order, or who are any other persons to whom it may otherwise
lawfully be made under the Financial Promotion Order (all such persons together being referred to as “relevant persons”).
In the United Kingdom, the Notes offered hereby are only available to, and any investment or investment activity to which this
pricing supplement, the accompanying product supplement, the accompanying prospectus supplement and the accompanying prospectus
relates will be engaged in only with, relevant persons. Any person in the United Kingdom that is not a relevant person should not
act or rely on this pricing supplement, the accompanying product supplement, the accompanying prospectus supplement or the accompanying
prospectus or any of their contents.
Any invitation or inducement
to engage in investment activity (within the meaning of Section 21 of the FSMA) in connection with the issue or sale of the Notes
may only be communicated or caused to be communicated in circumstances in which Section 21(1) of the FSMA does not apply to the
Issuer or the Guarantor.
All applicable
provisions of the FSMA must be complied with in respect to anything done by any person in relation to the Notes in, from or otherwise
involving the United Kingdom.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-14
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Contingent Income Issuer Callable Yield Notes Linked to the Common Stock of Apple Inc.
Structuring the Notes
The Notes
are our debt securities, the return on which is linked to the performance of the Underlying Stock. The related guarantee is BAC’s
obligation. As is the case for all of our and BAC’s respective debt securities, including our 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, which we refer to in this pricing supplement as BAC’s internal funding rate,
that is more favorable to BAC than the rate that it might pay for a conventional fixed or floating rate debt security. 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, resulted in the initial estimated value of the Notes on the pricing date being less than their
public offering price.
In order to meet our payment
obligations on the Notes, 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 based upon terms provided by 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
hedging arrangements. The economic terms of the Notes and their initial estimated value depend in part on the terms of these hedging
arrangements.
BofAS
has advised us that the hedging arrangements will include hedging related charges, reflecting the costs associated with, and our
affiliates’ profit earned from, these hedging arrangements. Since hedging entails risk and may be influenced by unpredictable
market forces, actual profits or losses from these hedging transactions may be more or less than any expected amounts.
For further
information, see “Risk Factors” beginning on page PS-8 above and “Supplemental Use of Proceeds” on page
PS-18 of the accompanying product supplement.
Validity of the Notes
In the
opinion of McGuireWoods LLP, as counsel to BofA Finance and BAC, when the trustee has made the appropriate entries or notations
on the applicable schedule to the master global note that represents the Notes (the “master note”) identifying the
Notes offered hereby as supplemental obligations thereunder in accordance with the instructions of BofA Finance and the provisions
of the indenture governing the Notes and the related guarantee, and the Notes have been delivered against payment therefor as contemplated
in this pricing supplement and the related prospectus, prospectus supplement and product supplement, such Notes will be the legal,
valid and binding obligations of BofA Finance, and the related guarantee will be the legal, valid and binding obligation of BAC,
subject, in each case, to the effects of applicable bankruptcy, insolvency (including laws relating to preferences, fraudulent
transfers and equitable subordination), reorganization, moratorium and other similar laws affecting creditors’ rights generally,
and to general principles of equity. This opinion is given as of the date of this pricing supplement and is limited to the laws
of the State of New York and the Delaware Limited Liability Company Act and the Delaware General Corporation Law (including the
statutory provisions, all applicable provisions of the Delaware Constitution and reported judicial decisions interpreting the foregoing)
as in effect on the date hereof. In addition, this opinion is subject to customary assumptions about the trustee’s authorization,
execution and delivery of the indenture governing the Notes and due authentication of the master note, the validity, binding nature
and enforceability of the indenture governing the Notes and the related guarantee with respect to the trustee, the legal capacity
of individuals, the genuineness of signatures, the authenticity of all documents submitted to McGuireWoods LLP as originals, the
conformity to original documents of all documents submitted to McGuireWoods LLP as copies thereof, the authenticity of the originals
of such copies and certain factual matters, all as stated in the letter of McGuireWoods LLP dated December 30, 2019, which has
been filed as an exhibit to Pre-Effective Amendment No. 1 to the Registration Statement (File No. 333-234425) of BofA Finance and
BAC, filed with the SEC on December 30, 2019.
Sidley
Austin LLP, New York, New York, is acting as counsel to BofAS and as special tax counsel to BofA Finance and BAC.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-15
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Contingent Income Issuer Callable Yield Notes Linked to the Common Stock of Apple Inc.
U.S. Federal Income Tax Summary
The following summary of the material
U.S. federal income tax considerations of the acquisition, ownership, and disposition of the Notes supplements, and to the extent
inconsistent supersedes, the discussions under “U.S. Federal Income Tax Considerations” in the accompanying prospectus
and under “U.S. Federal Income Tax Considerations” in the accompanying prospectus supplement and is not exhaustive
of all possible tax considerations. This summary is based upon the Internal Revenue Code of 1986, as amended (the “Code”),
regulations promulgated under the Code by the U.S. Treasury Department (“Treasury”) (including proposed and temporary
regulations), rulings, current administrative interpretations and official pronouncements of the IRS, and judicial decisions, all
as currently in effect and all of which are subject to differing interpretations or to change, possibly with retroactive effect.
No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax
consequences described below. This summary does not include any description of the tax laws of any state or local governments,
or of any foreign government, that may be applicable to a particular holder.
Although the Notes are issued by us,
they will be treated as if they were issued by BAC for U.S. federal income tax purposes. Accordingly throughout this tax discussion,
references to “we,” “our” or “us” are generally to BAC unless the context requires otherwise.
This summary is directed solely to U.S.
Holders and Non-U.S. Holders that, except as otherwise specifically noted, will purchase the Notes upon original issuance and will
hold the Notes as capital assets within the meaning of Section 1221 of the Code, which generally means property held for investment,
and that are not excluded from the discussion under “U.S. Federal Income Tax Considerations” in the accompanying prospectus.
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.
General
Although there is no statutory, judicial,
or administrative authority directly addressing the characterization of the Notes, we intend to treat the Notes for all tax purposes
as contingent income-bearing single financial contracts with respect to the Underlying Stock and under the terms of the Notes,
we and every investor in the Notes agree, in the absence of an administrative determination or judicial ruling to the contrary,
to treat the Notes in accordance with such characterization. In the opinion of our counsel, Sidley Austin LLP, it is reasonable
to treat the Notes as contingent income-bearing single financial contracts with respect to the Underlying Stock. However, Sidley
Austin LLP has advised us that it is unable to conclude that it is more likely than not that this treatment will be upheld. This
discussion assumes that the Notes constitute contingent income-bearing single financial contracts with respect to the Underlying
Stock for U.S. federal income tax purposes. If the Notes did not constitute contingent income-bearing single financial contracts,
the tax consequences described below would be materially different.
This characterization of the Notes
is not binding on the IRS or the courts. No statutory, judicial, or administrative authority directly addresses the characterization
of the Notes or any similar instruments for U.S. federal income tax purposes, and no ruling is being requested from the IRS with
respect to their proper characterization and treatment. Due to the absence of authorities on point, significant aspects of the
U.S. federal income tax consequences of an investment in the Notes are not certain, and no assurance can be given that the IRS
or any court will agree with the characterization and tax treatment described in this pricing supplement. Accordingly, you are
urged to consult your tax advisor regarding all aspects of the U.S. federal income tax consequences of an investment in the Notes,
including possible alternative characterizations.
Unless otherwise stated, the following
discussion is based on the characterization described above. The discussion in this section assumes that there is a significant
possibility of a significant loss of principal on an investment in the Notes.
We will not attempt to ascertain whether
the issuer of the Underlying Stock would be treated as a “passive foreign investment company” (“PFIC”),
within the meaning of Section 1297 of the Code, or a United States real property holding corporation, within the meaning of Section
897(c) of the Code. If the issuer of the Underlying Stock was so treated, certain adverse U.S. federal income tax consequences
could possibly apply to a holder of the Notes. You should refer to information filed with the SEC by the issuer of the Underlying
Stock and consult your tax advisor regarding the possible consequences to you, if any, if the issuer of the Underlying Stock is
or becomes a PFIC or is or becomes a United States real property holding corporation.
U.S. Holders
Although the U.S. federal income tax
treatment of any Contingent Coupon Payment on the Notes is uncertain, we intend to take the position, and the following discussion
assumes, that any Contingent Coupon Payment constitutes taxable ordinary income to a U.S. Holder at the time received or accrued
in accordance with the U.S. Holder’s regular method of accounting. By purchasing the Notes you agree, in the absence of an
administrative
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-16
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Contingent Income Issuer Callable Yield Notes Linked to the Common Stock of Apple Inc.
determination or judicial ruling to the contrary, to treat any Contingent
Coupon Payment as described in the preceding sentence.
Upon receipt of a cash payment at maturity
or upon a sale, exchange, or redemption of the Notes prior to maturity, a U.S. Holder generally will recognize capital gain or
loss equal to the difference between the amount realized (other than amounts representing any Contingent Coupon Payment, which
would be taxed as described above) and the U.S. Holder’s tax basis in the Notes. A U.S. Holder’s tax basis in the Notes
will equal the amount paid by that holder to acquire them. This capital gain or loss generally will be long-term capital gain or
loss if the U.S. Holder held the Notes for more than one year. The deductibility of capital losses is subject to limitations.
Alternative Tax Treatments. Due
to the absence of authorities that directly address the proper tax treatment of the Notes, prospective investors are urged to consult
their tax advisors regarding all possible alternative tax treatments of an investment in the Notes. In particular, the IRS could
seek to subject the Notes to the Treasury regulations governing contingent payment debt instruments. If the IRS were successful
in that regard, the timing and character of income on the Notes would be affected significantly. Among other things, a U.S. Holder
would be required to accrue original issue discount every year at a “comparable yield” determined at the time of issuance.
In addition, any gain realized by a U.S. Holder at maturity or upon a sale, exchange, or redemption of the Notes generally would
be treated as ordinary income, and any loss realized at maturity or upon a sale, exchange, or redemption of the Notes generally
would be treated as ordinary loss to the extent of the U.S. Holder’s prior accruals of original issue discount, and as capital
loss thereafter.
In addition, it is possible that the
Notes could be treated as a unit consisting of a deposit and a put option written by the Note holder, in which case the timing
and character of income on the Notes would be affected significantly.
The IRS released Notice 2008-2 (the “Notice”),
which sought comments from the public on the taxation of financial instruments currently taxed as “prepaid forward contracts.”
This Notice addresses instruments such as the Notes. According to the Notice, the IRS and Treasury are considering whether a holder
of an instrument such as the Notes should be required to accrue ordinary income on a current basis, regardless of whether any payments
are made prior to maturity. It is not possible to determine what guidance the IRS and Treasury will ultimately issue, if any. Any
such future guidance may affect the amount, timing and character of income, gain, or loss in respect of the Notes, possibly with
retroactive effect.
The IRS and Treasury are also considering
additional issues, including whether additional gain or loss from such instruments should be treated as ordinary or capital, whether
foreign holders of such instruments should be subject to withholding tax on any deemed income accruals, whether Section 1260 of
the Code, concerning certain “constructive ownership transactions,” generally applies or should generally apply to
such instruments, and whether any of these determinations depend on the nature of the underlying asset.
In addition, proposed Treasury regulations
require the accrual of income on a current basis for contingent payments made under certain notional principal contracts. The preamble
to the regulations states that the “wait and see” method of accounting does not properly reflect the economic accrual
of income on those contracts, and requires current accrual of income for some contracts already in existence. While the proposed
regulations do not apply to prepaid forward contracts, the preamble to the proposed regulations expresses the view that similar
timing issues exist in the case of prepaid forward contracts. If the IRS or Treasury publishes future guidance requiring current
economic accrual for contingent payments on prepaid forward contracts, it is possible that you could be required to accrue income
over the term of the Notes.
Because of the absence of authority regarding
the appropriate tax characterization of the Notes, it is also possible that the IRS could seek to characterize the Notes in a manner
that results in tax consequences that are different from those described above. For example, the IRS could possibly assert that
any gain or loss that a holder may recognize at maturity or upon the sale, exchange, or redemption of the Notes should be treated
as ordinary gain or loss.
Non-U.S. Holders
Because the U.S. federal income tax treatment
of the Notes (including any Contingent Coupon Payment) is uncertain, we will withhold U.S. federal income tax at a 30% rate (or
at a lower rate under an applicable income tax treaty) on the entire amount of any Contingent Coupon Payment made unless such payments
are effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the U.S. (in which case, to avoid withholding,
the Non-U.S. Holder will be required to provide a Form W-8ECI). We will not pay any additional amounts in respect of such withholding.
To claim benefits under an income tax treaty, a Non-U.S. Holder must obtain a taxpayer identification number and certify as to
its eligibility under the appropriate treaty’s limitations on benefits article, if applicable. In addition, special rules
may apply to claims for treaty benefits made by Non-U.S. Holders that are entities rather than individuals. The availability of
a lower rate of withholding under an applicable income tax treaty will depend on whether such rate applies to the characterization
of the payments under U.S. federal income tax laws. A Non-U.S. Holder that is eligible for a reduced rate of U.S. federal withholding
tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund
with the IRS.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-17
|
Contingent Income Issuer Callable Yield Notes Linked to the Common Stock of Apple Inc.
Except as discussed below, a Non-U.S.
Holder generally will not be subject to U.S. federal income or withholding tax for amounts paid in respect of the Notes (not including,
for the avoidance of doubt, amounts representing any Contingent Coupon Payment which would be subject to the rules discussed in
the previous paragraph) upon the sale, exchange, or redemption of the Notes or their settlement at maturity, provided that the
Non-U.S. Holder complies with applicable certification requirements and that the payment is not effectively connected with the
conduct by the Non-U.S. Holder of a U.S. trade or business. Notwithstanding the foregoing, gain from the sale, exchange, or redemption
of the Notes or their settlement at maturity may be subject to U.S. federal income tax if that Non-U.S. Holder is a non-resident
alien individual and is present in the U.S. for 183 days or more during the taxable year of the sale, exchange, redemption, or
settlement and certain other conditions are satisfied.
If a Non-U.S. Holder of the Notes is
engaged in the conduct of a trade or business within the U.S. and if any Contingent Coupon Payment and gain realized on the settlement
at maturity, or upon sale, exchange, or redemption of the Notes, is effectively connected with the conduct of such trade or business
(and, if certain tax treaties apply, is attributable to a permanent establishment maintained by the Non-U.S. Holder in the U.S.),
the Non-U.S. Holder, although exempt from U.S. federal withholding tax, generally will be subject to U.S. federal income tax on
such Contingent Coupon Payment and gain on a net income basis in the same manner as if it were a U.S. Holder. Such Non-U.S. Holders
should read the material under the heading “—U.S. Holders,” for a description of the U.S. federal income tax
consequences of acquiring, owning, and disposing of the Notes. In addition, if such Non-U.S. Holder is a foreign corporation, it
may also be subject to a branch profits tax equal to 30% (or such lower rate provided by any applicable tax treaty) of a portion
of its earnings and profits for the taxable year that are effectively connected with its conduct of a trade or business in the
U.S., subject to certain adjustments.
A “dividend equivalent” payment
is treated as a dividend from sources within the United States and such payments generally would be subject to a 30% U.S. withholding
tax if paid to a Non-U.S. Holder. Under Treasury regulations, payments (including deemed payments) with respect to equity-linked
instruments (“ELIs”) that are “specified ELIs” may be treated as dividend equivalents if such specified
ELIs reference an interest in an “underlying security,” which is generally any interest in an entity taxable as a corporation
for U.S. federal income tax purposes if a payment with respect to such interest could give rise to a U.S. source dividend. However,
IRS guidance provides that withholding on dividend equivalent payments will not apply to specified ELIs that are not delta-one
instruments and that are issued before January 1, 2023. Based on our determination that the Notes are not delta-one instruments,
Non-U.S. Holders should not be subject to withholding on dividend equivalent payments, if any, under the Notes. However, it is
possible that the Notes could be treated as deemed reissued for U.S. federal income tax purposes upon the occurrence of certain
events affecting the Underlying Stock or the Notes, and following such occurrence the Notes could be treated as subject to withholding
on dividend equivalent payments. Non-U.S. Holders that enter, or have entered, into other transactions in respect of the Underlying
Stock or the Notes should consult their tax advisors as to the application of the dividend equivalent withholding tax in the context
of the Notes and their other transactions. If any payments are treated as dividend equivalents subject to withholding, we (or the
applicable paying agent) would be entitled to withhold taxes without being required to pay any additional amounts with respect
to amounts so withheld.
As discussed above, alternative characterizations
of the Notes for U.S. federal income tax purposes are possible. Should an alternative characterization, by reason of change or
clarification of the law, by regulation or otherwise, cause payments as to the Notes to become subject to withholding tax in addition
to the withholding tax described above, tax will be withheld at the applicable statutory rate. Prospective Non-U.S. Holders should
consult their own tax advisors regarding the tax consequences of such alternative characterizations.
U.S. Federal Estate Tax. Under
current law, while the matter is not entirely clear, individual Non-U.S. Holders, and entities whose property is potentially includible
in those individuals’ gross estates for U.S. federal estate tax purposes (for example, a trust funded by such an individual
and with respect to which the individual has retained certain interests or powers), should note that, absent an applicable treaty
benefit, a Note is likely to be treated as U.S. situs property, subject to U.S. federal estate tax. These individuals and entities
should consult their own tax advisors regarding the U.S. federal estate tax consequences of investing in a Note.
Backup Withholding and Information Reporting
Please see the discussion under “U.S.
Federal Income Tax Considerations — Taxation of Debt Securities — Backup Withholding and Information Reporting”
in the accompanying prospectus for a description of the applicability of the backup withholding and information reporting rules
to payments made on the Notes.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-18
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Contingent Income Issuer Callable Yield Notes Linked to the Common Stock of Apple Inc.
Where You Can Find More Information
The terms and risks of the Notes are
contained in this pricing supplement and in the following related product supplement, prospectus supplement and prospectus, which
can be accessed at the following links:
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 BofAS by calling 1-800-294-1322. Before you
invest, you should read the Note Prospectus, including this pricing supplement, 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 pricing supplement have the meanings set forth in the accompanying product supplement
or prospectus supplement. 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.
The Notes are our senior
debt securities. Any 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 our other unsecured and unsubordinated obligations, and the related guarantee will rank
equally in right of payment with all of BAC’s other unsecured and unsubordinated obligations, in each case, except obligations
that are subject to any priorities or preferences by law. Any payments due on the Notes, including any repayment of the principal
amount, will be subject to the credit risk of BofA Finance, as Issuer, and BAC, as Guarantor.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-19
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