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Filed
Pursuant to Rule 424(b)(2)
Registration
Statement No. 333-234425
(To
Prospectus dated December
31, 2019,
Prospectus
Supplement dated December
31, 2019 and
Product
Supplement EQUITY
ARN-1 dated May
20, 2020)
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3,089,962 Units
$10
principal amount per unit
CUSIP
No. 09710C824
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Pricing
Date
Settlement
Date
Maturity
Date
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November 24,
2020
December
2, 2020
January
28,
2022
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BofA
Finance LLC
Accelerated
Return Notes® Linked
to the S&P
500® Index
Fully
and Unconditionally Guaranteed by Bank of America
Corporation
■
Maturity
of approximately 14 months
■
3-to-1
upside exposure to increases in the Index, subject
to a capped return of 13.02%
■
1-to-1
downside exposure to decreases in the Index, 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
■
In
addition to the underwriting discount set forth below, the notes
include a hedging-related charge of $0.05 per
unit. See “Structuring
the Notes”
■
Limited
secondary market liquidity, with no exchange listing
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|
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-7 of
this
term sheet, page PS-7 of the
accompanying product supplement, page S-5 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 $9.751 per
unit, which is less than the public offering price listed
below. See
“Summary” on the following page, “Risk Factors” beginning on page
TS-7 of
this term sheet and “Structuring the Notes” on page
TS-13 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.
_________________________
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Per
Unit
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Total
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Public
offering price(1)
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$10.000
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$30,864,620.00
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Underwriting
discount(1)
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$0.175
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$ 505,743.35
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Proceeds,
before expenses, to BofA
Finance
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$9.825
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$30,358,876.65
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(1)
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The
public offering price and underwriting
discount for an aggregate of 700,000
units or purchased
in a transaction of 300,000 units by an individual
investor will
be $9.95 per unit and $0.125 per
unit, respectively. See “Supplement
to the Plan of Distribution; Conflicts of
Interest” below.
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The
notes and
the related guarantee:
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Are
Not FDIC Insured
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Are
Not Bank Guaranteed
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May
Lose Value
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BofA Securities
November 24,
2020
|
Accelerated
Return Notes®
Linked
to the S&P
500® Index,
due January
28,
2022
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|
Summary
The
Accelerated Return Notes® Linked
to the S&P
500® Index,
due January 28,
2022 (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,
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
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 S&P
500® Index (the “Index”),
is greater than its 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 Index, subject to our and
BAC’s
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 the
hedging-related
charge described below, reduced 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 are paying
to purchase the notes is greater
than the initial estimated value of the notes.
On
the cover page of this term sheet, we have provided
the
initial estimated value for
the notes. This
initial estimated value 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. For more information about the initial estimated value
and the structuring
of the notes, see “Structuring
the Notes” on
page TS-13.
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Terms
of the Notes
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Redemption
Amount Determination
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Issuer:
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BofA
Finance LLC (“BofA
Finance”)
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On
the maturity date, you will receive a cash payment per unit
determined as follows:
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Guarantor:
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Bank
of America Corporation (“BAC”)
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Principal
Amount:
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$10.00
per unit
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Term:
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Approximately
14 months
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Market
Measure:
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The S&P
500® Index (Bloomberg
symbol: “SPX”),
a price return index
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Starting
Value:
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3,635.41
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Ending
Value:
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The
average of the closing levels of the Market Measure on each
calculation
day occurring during the Maturity Valuation Period.
The scheduled calculation
days are subject to postponement in the event of Market Disruption
Events,
as described beginning on
page PS-26 of the
accompanying product supplement.
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Participation
Rate:
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300%
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Capped
Value:
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$11.302 per
unit,
which represents a return of 13.02% over
the principal amount.
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Maturity
Valuation Period:
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January
19, 2022, January 20, 2022, January 21, 2022, January 24, 2022 and
January 25, 2022
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Fees
and Charges:
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The
underwriting discount of $0.175 per
unit listed on the cover page and the hedging-related
charge of $0.05 per
unit described in “Structuring
the Notes” on
page TS-13.
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Calculation
Agent:
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BofA
Securities, Inc. (“BofAS”),
an affiliate of BofA Finance.
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Accelerated
Return Notes®
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TS-2
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Accelerated
Return Notes®
Linked
to the S&P
500® Index,
due January
28,
2022
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The
terms and risks of the notes are contained in this term sheet and
in the following:
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.
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
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You
may wish to consider an investment in the notes
if:
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The
notes may not be an appropriate investment for you
if:
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■
You
anticipate that the Index will increase moderately from the
Starting Value to the Ending Value.
■
You
are willing to risk a loss of principal and return if the Index
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 the
stocks included in the Index.
■
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.
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■
You
believe that the Index 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 the stocks
included in the Index.
■
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.
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We
urge you to consult
your investment, legal, tax, accounting,
and other advisors before you invest in the notes.
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Accelerated
Return Notes®
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TS-3
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Accelerated
Return Notes®
Linked
to the S&P
500® Index,
due January
28,
2022
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Hypothetical
Payout Profile and Examples of Payments at Maturity
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Accelerated
Return Notes®
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This
graph reflects the returns on the notes, based on
the Participation
Rate of 300% and the Capped
Value of $11.302 per
unit.
The green line reflects the returns on the notes, while the dotted
gray line reflects the returns of a direct investment in the stocks
included in the Index, excluding dividends.
This
graph has been prepared for purposes of illustration
only.
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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%, the Capped
Value of $11.302 per
unit 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 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 levels of the Market Measure,
see “The
Index” section
below. The Index is a price return index and as such the Ending
Value will not include any income generated by dividends paid on
the stocks included in the Index, which you would otherwise be
entitled to receive if you invested in those stocks directly. In
addition, all payments on the notes are subject to
issuer and
guarantor credit
risk.
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Accelerated
Return Notes®
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TS-4
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Accelerated
Return Notes®
Linked
to the S&P
500® Index,
due January
28,
2022
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Ending
Value
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Percentage
Change from the Starting Value to the Ending Value
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Redemption
Amount per Unit
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Total
Rate of Return on the Notes
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0.00
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-100.00%
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$0.000
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-100.00%
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50.00
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-50.00%
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$5.000
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-50.00%
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80.00
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-20.00%
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$8.000
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-20.00%
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90.00
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-10.00%
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$9.000
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-10.00%
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94.00
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-6.00%
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$9.400
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-6.00%
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97.00
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-3.00%
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$9.700
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-3.00%
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100.00(1)
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0.00%
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$10.000
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0.00%
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102.00
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2.00%
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$10.600
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6.00%
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105.00
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5.00%
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$11.302(2)
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13.02%
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110.00
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10.00%
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$11.302
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13.02%
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120.00
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20.00%
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$11.302
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13.02%
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130.00
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30.00%
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$11.302
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13.02%
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140.00
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40.00%
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$11.302
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13.02%
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150.00
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50.00%
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$11.302
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13.02%
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160.00
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60.00%
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$11.302
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13.02%
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(1)
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The hypothetical Starting
Value of 100 used in these examples has been
chosen for
illustrative purposes only. The actual
Starting Value is
3,635.41,
which was the closing level of the
Market Measure on
the pricing date.
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(2)
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The
Redemption Amount per unit cannot exceed the Capped
Value.
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Accelerated
Return Notes®
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TS-5
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Accelerated
Return Notes®
Linked
to the S&P
500® Index,
due January
28,
2022
|
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Redemption
Amount Calculation Examples
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Example
1
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The
Ending Value is 80.00, or 80.00% of the Starting
Value:
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Starting
Value: 100.00
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Ending
Value: 80.00
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=
$8.00 Redemption
Amount per unit
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Example
2
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The
Ending Value is 102.00, or 102.00% of the Starting
Value:
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Starting
Value: 100.00
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Ending
Value: 102.00
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=
$10.60 Redemption
Amount per unit
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Example
3
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The
Ending Value is 130.00, or 130.00% of the Starting
Value:
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Starting
Value: 100.00
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Ending
Value: 130.00
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=
$19.00, however, because the Redemption Amount for the notes cannot
exceed the Capped Value, the Redemption Amount will
be $11.302 per
unit
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Accelerated
Return Notes®
|
TS-6
|
|
Accelerated
Return Notes®
Linked
to the S&P
500® Index,
due January
28,
2022
|
|
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-7 of the
accompanying product supplement,
page S-5 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
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■
|
Depending
on the performance of the Index as measured shortly before the
maturity date, your investment may result in a loss; there is no
guaranteed return of principal.
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■
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Your
return on the notes may be less than the yield you could earn by
owning a conventional fixed or floating rate debt security of
comparable maturity.
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■
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Payments
on the notes are subject to our credit risk, and the credit risk of
BAC, and any actual
or perceived changes in our or BAC’s creditworthiness are expected
to affect the value of the notes. If we and BAC become insolvent or
are unable to pay our respective obligations, you may lose your
entire investment.
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|
■
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Your
investment return is limited to the return represented by the
Capped Value and may be less than a comparable investment
directly in the securities included
in the Index.
|
|
■
|
We
are a finance
subsidiary and, as such, have no
independent assets,
operations or revenues.
|
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■
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BAC’s
obligations under its guarantee of the notes will be structurally
subordinated to liabilities of its subsidiaries.
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■
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The
notes issued by us will not have the benefit of any cross-default
or cross-acceleration with other indebtedness of BofA Finance or
BAC; events of bankruptcy or insolvency or resolution proceedings
relating to BAC and covenant breach by BAC will not constitute an
event of default
with respect to the notes.
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Valuation and Market-related Risks
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■
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The
initial estimated value of the notes considers
certain assumptions and variables and relies in part on certain
forecasts about future events, which may prove to be incorrect. The
initial estimated value of the notes is
an estimate only, determined as
of 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 BAC, BAC’s internal funding rate
on the pricing date, mid-market terms on hedging transactions,
expectations on interest rates and volatility, price-sensitivity
analysis, and the expected term of the notes. These pricing
models rely in part on certain forecasts about future events, which
may prove to be incorrect.
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|
■
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The
public offering price you are paying
for the notes exceeds 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 level
of the Index, changes
in BAC’s
internal funding rate,
and the inclusion in the public offering price of the underwriting
discount and the hedging-related
charge, all as further described in “Structuring the Notes” on page
TS-13.
These factors, together with various credit, market and economic
factors over the term of the notes, are expected to reduce the
price at which you may be able to sell the notes in any secondary
market and will affect the value of the notes in complex and
unpredictable ways.
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■
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The
initial estimated value does not represent a minimum or maximum
price at which we, BAC, MLPF&S,
BofAS or
any of our other affiliates
would be willing to purchase your notes in any secondary market (if
any exists) at any time. The value of your notes at any time after
issuance will vary based on many factors that cannot be predicted
with accuracy, including the performance of
the Index,
our and
BAC’s creditworthiness
and changes in market conditions.
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|
■
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A
trading market is not expected to develop for the
notes. None
of us, BAC, MLPF&S or
BofAS is
obligated to make a market for, or to repurchase, the notes. There
is no assurance that any party will be willing to purchase your
notes at any price in any secondary market.
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Conflict-related Risks
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■
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BAC
and its affiliates’ hedging and trading activities (including
trades in shares of companies included in the Index) and any
hedging and trading activities BAC or its affiliates engage in that
are not for your account or on your behalf, may affect the market
value and return of the notes and may create conflicts of interest
with you.
|
|
■
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There
may be potential conflicts of interest involving the calculation
agent, which is an affiliate of ours. We have the right to
appoint and remove the calculation agent.
|
Market Measure-related Risks
|
■
|
The
Index sponsor may adjust the Index in a way that affects its level,
and has no obligation to consider your interests.
|
|
■
|
You
will have no rights of a holder of the securities represented by
the Index, and you will not be entitled to receive securities or
dividends or other distributions by the issuers of those
securities.
|
|
■
|
While
BAC and our other affiliates may from
time to time own securities of companies included
in the Index, except to the extent that BAC’s common stock
is included
in the Index, we, BAC and our other affiliates do not control any
company included in the Index, and have not verified any disclosure
made by
any other company.
|
|
Accelerated
Return Notes®
|
TS-7
|
|
Accelerated
Return Notes®
Linked
to the S&P
500® Index,
due January
28,
2022
|
|
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-38 of the
accompanying product supplement.
|
|
Accelerated
Return Notes®
|
TS-8
|
|
Accelerated
Return Notes®
Linked
to the S&P
500® Index,
due January
28,
2022
|
|
The
Index
All
disclosures contained in this term sheet regarding the Index,
including, without limitation, its make-up, method of calculation,
and changes in its components, have been derived from publicly
available sources. The information reflects the policies of, and is
subject to change by, S&P
Dow Jones Indices LLC (the
“Index sponsor”). The Index sponsor, which licenses the copyright
and all other rights to the Index, has no obligation to continue to
publish, and may discontinue publication of, the Index. The
consequences of the Index sponsor discontinuing publication of the
Index are discussed in the section of the
accompanying product supplement beginning
on page PS-28 entitled
“Description of ARNs—Discontinuance of an Index.” None of
us, BAC, the calculation agent, MLPF&S or
BofAS accepts any responsibility for the calculation,
maintenance or publication of the Index or any successor
index.
The
Index is intended to provide an indication of the pattern of common
stock price movement. The calculation of the level of the Index is
based on the relative value of the aggregate market value of the
common stocks of 500 companies as of a particular time compared to
the aggregate average market value of the common stocks of 500
similar companies during the base period of the years 1941 through
1943.
The Index includes
companies from eleven main groups: Communication Services; Consumer
Discretionary; Consumer Staples; Energy; Financials; Health Care;
Industrials; Information Technology; Real Estate; Materials; and
Utilities. The Index
sponsor
may from time to time, in its sole discretion, add companies to, or
delete companies from, the Index to
achieve the objectives stated above.
The
Index sponsor calculates the Index by reference to the prices of
the constituent stocks of the Index without taking account of the
value of dividends paid on those stocks. As a result, the return on
the notes will not reflect the return you would realize if you
actually owned the Index constituent stocks and received the
dividends paid on those stocks.
Computation
of the Index
While
the Index sponsor currently employs the following methodology to
calculate the Index, no assurance can be given that the Index
sponsor will not modify or change this methodology in a manner that
may affect the Redemption Amount.
Historically,
the market value of any component stock of the Index was calculated
as the product of the market price per share and the number of then
outstanding shares of such component stock. In March 2005, the
Index sponsor began shifting the Index halfway from a market
capitalization weighted formula to a float-adjusted formula, before
moving the Index to full float adjustment on September 16, 2005.
The Index sponsor’s criteria for selecting stocks for the Index did
not change with the shift to float adjustment. However, the
adjustment affects each company’s weight in the
Index.
Under
float adjustment, the share counts used in calculating the Index
reflect only those shares that are available to investors, not all
of a company’s outstanding shares. Float adjustment excludes
shares that are closely held by control groups, other publicly
traded companies or government agencies.
In
September 2012, all shareholdings representing more than 5% of a
stock’s outstanding shares, other than holdings by “block owners,”
were removed from the float for purposes of calculating the Index.
Generally, these “control holders” will include officers and
directors, private equity, venture capital and special equity
firms, other publicly traded companies that hold shares for
control, strategic partners, holders of restricted shares, ESOPs,
employee and family trusts, foundations associated with the
company, holders of unlisted share classes of stock, government
entities at all levels (other than government retirement/pension
funds) and any individual person who controls a 5% or greater stake
in a company as reported in regulatory filings. However,
holdings by block owners, such as depositary banks, pension funds,
mutual funds and ETF providers, 401(k) plans of the company,
government retirement/pension funds, investment funds of insurance
companies, asset managers and investment funds, independent
foundations and savings and investment plans, will ordinarily be
considered part of the float.
Treasury
stock, stock options, equity
participation units, warrants, preferred stock, convertible stock,
and rights are not part of the float. Shares held in a trust to
allow investors in countries outside the country of domicile, such
as depositary shares and Canadian exchangeable
shares, are
normally part of the float unless those shares form a control
block. If a company has multiple classes of stock
outstanding, shares in an unlisted or non-traded class are treated
as a control block.
For
each stock, an investable weight factor (“IWF”) is calculated by
dividing the available float shares by the total shares
outstanding. Available float shares are defined as the total
shares outstanding less shares held by control holders. This
calculation is subject to a 5% minimum threshold for control
blocks. For example, if a company’s officers and directors
hold 3% of the company’s shares, and no other control group holds
5% of the company’s shares, the Index sponsor would assign that
company an IWF of 1.00, as no control group meets the 5% threshold.
However, if a company’s officers and directors hold 3% of the
company’s shares and another control group holds 20% of the
company’s shares, the Index sponsor would assign an IWF of 0.77,
reflecting the fact that 23% of the company’s outstanding shares
are considered to be held for control. As
of July 31, 2017, companies
with multiple share
class lines are no longer eligible for inclusion in the
Index. Constituents
of the Index prior to July 31, 2017 with multiple share class lines
will be grandfathered in and continue to be included in the Index.
If a constituent company of the Index reorganizes into a multiple
share class line structure, that company will remain in the Index
at the discretion of the S&P Index Committee in order to
minimize turnover.
The
Index is calculated using a base-weighted aggregate methodology.
The level of the Index reflects the total market value of all
component stocks relative to the base period of the years 1941
through 1943. An indexed number is used to represent the results of
this calculation in order to make the level easier to work with and
track over time. The actual total market value of the component
stocks during the base period of the years 1941 through 1943 has
been set to an indexed level of 10. This is often indicated by the
notation 1941- 43 = 10. In practice, the daily calculation of the
Index is computed by dividing the total market value of the
component stocks by the
“index divisor.” By itself, the index divisor is an arbitrary
number. However, in the context of the calculation of the Index, it
serves as
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Accelerated
Return Notes®
|
TS-9
|
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Accelerated
Return Notes®
Linked
to the S&P
500® Index,
due January
28,
2022
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a
link to the original base period level of the Index. The index
divisor keeps the Index comparable over time and is the
manipulation point for all adjustments to the Index, which is index
maintenance.
Index
Maintenance
Index
maintenance includes monitoring and completing the adjustments for
company additions and deletions, share changes, stock splits, stock
dividends, and stock price adjustments due to company restructuring
or spinoffs. Some corporate actions, such as stock splits and stock
dividends, require changes in the common shares outstanding and the
stock prices of the companies in the Index, and do not require
index divisor adjustments.
To
prevent the level of the Index from changing due to corporate
actions, corporate actions which affect the total market value of
the Index require an index divisor adjustment. By adjusting the
index divisor for the change in market value, the level of the
Index remains constant and does not reflect the corporate actions
of individual companies in the Index. Index divisor adjustments are
made after the close of trading and after the calculation of the
Index closing level.
Changes
in a company’s shares outstanding of 5.00% or more due to mergers,
acquisitions, public offerings, tender offers, Dutch auctions, or
exchange offers are made as soon as reasonably
possible. Share
changes due to mergers or acquisitions of publicly held companies
that trade on a major exchange are implemented when the transaction
occurs, even if both of the companies are not in the same headline
index, and regardless of the size of the
change. All
other changes of 5.00% or more (due to, for example, company stock
repurchases, private placements, redemptions, exercise of options,
warrants, conversion of preferred stock, notes, debt, equity
participation units, at-the-market offerings, or other
recapitalizations) are made weekly and are announced
on Fridays for
implementation after the close of trading on the
following Friday.
Changes of less than 5.00% are accumulated and made quarterly on
the third Friday of March, June, September, and December, and are
usually announced two to five days prior.
If
a change
in a
company’s shares outstanding of 5.00%
or more causes
a company’s IWF to change by five
percentage points or
more, the IWF is updated at the same time as the
share change. IWF changes resulting
from partial tender offers are considered
on a case by case basis.
The following graph shows the daily historical performance of the
Index in the period from January
1, 2010 through November
24, 2020.
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 the
pricing date,
the closing
level of the Index was 3,635.41.
Historical
Performance of the Index
This historical data on the Index is not necessarily indicative of
the future performance of the Index or what the value of the notes
may be. Any historical upward or downward trend in the level of the
Index during any period set forth above is not an indication that
the level of the Index 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 levels of the Index.
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Accelerated
Return Notes®
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TS-10
|
|
Accelerated
Return Notes®
Linked
to the S&P
500® Index,
due January
28,
2022
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License
Agreement
S&P® is
a registered trademark of Standard & Poor’s Financial Services
LLC (“S&P”) and Dow Jones® is
a registered trademark of Dow Jones Trademark Holdings LLC (“Dow
Jones”). These trademarks have been licensed for use by
S&P Dow Jones Indices LLC. “Standard &
Poor’s®,”
“S&P 500®”
and “S&P®”
are trademarks of S&P. These trademarks have been sublicensed
for certain purposes by our affiliate,
MLPF&S. The Index is a product of S&P Dow Jones
Indices LLC and/or its affiliates and has been licensed for use
by MLPF&S.
The
notes are not
sponsored, endorsed, sold or promoted by S&P Dow Jones Indices
LLC, Dow Jones, S&P or any of their respective affiliates
(collectively, “S&P Dow Jones Indices”). S&P Dow
Jones Indices make no representation or warranty, express or
implied, to the holders of the notes or
any member of the public regarding the advisability of investing in
securities generally or in the
notes particularly
or the ability of the Index to track general market
performance. S&P Dow Jones Indices’ only
relationship to MLPF&S with
respect to the Index is
the licensing of the Index and certain trademarks, service marks
and/or trade names of S&P Dow Jones Indices and/or its third
party licensors. The Index is determined, composed and
calculated by S&P Dow Jones Indices without regard
to us, BAC, MLPF&S, BofAS or
the notes.
S&P Dow Jones Indices have no obligation to take our
needs,
BAC’s needs or
the needs of MLPF&S or
holders of the
notes into
consideration in determining, composing or calculating the
Index. S&P Dow Jones Indices are not
responsible for and have not participated in the determination of
the prices, and amount of the
notes or
the timing of the issuance or sale of the
notes or
in the determination or calculation of the equation by
which the
notes are
to be converted into cash. S&P Dow Jones Indices
have no obligation or liability in connection with the
administration, marketing or trading of the
notes. There
is no assurance that investment products based on the Index will
accurately track index performance or provide positive investment
returns. S&P Dow Jones Indices LLC and its
subsidiaries are not investment advisors. Inclusion of a
security or futures contract within an index is not a
recommendation by S&P Dow Jones Indices to buy, sell, or hold
such security or futures contract, nor is it considered to be
investment advice. Notwithstanding the foregoing,
CME Group Inc. and its affiliates may independently issue and/or
sponsor financial products unrelated to the
notes currently
being issued by us,
but which may be similar to and competitive
with the
notes. In
addition, CME Group Inc. and its affiliates may trade financial
products which are linked to the performance of the
Index. It
is possible that this trading activity will affect the value
of the
notes.
S&P
DOW JONES INDICES DO NOT GUARANTEE THE ADEQUACY, ACCURACY,
TIMELINESS AND/OR THE COMPLETENESS OF THE INDEX OR ANY DATA RELATED
THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR
WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH
RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE
SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR
DELAYS THEREIN. S&P DOW JONES INDICES MAKE NO
EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL
WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
OR USE OR AS TO RESULTS TO BE OBTAINED BY US, BAC, MLPF&S, BOFAS, HOLDERS
OF THE NOTES,
OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX OR WITH
RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING
ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW
JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL,
PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO,
LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF
THEY HAVE BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR
OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY
AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES
AND MLPF&S, OTHER
THAN THE LICENSORS OF S&P DOW JONES INDICES.
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Accelerated
Return Notes®
|
TS-11
|
|
Accelerated
Return Notes®
Linked
to the S&P
500® Index,
due January
28,
2022
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|
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 will
receive a selling concession 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.
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
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.
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 100 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 Index 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.
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the
investor’s
spouse (including a domestic partner), siblings, parents,
grandparents, spouse’s
parents, children and grandchildren, but excluding accounts held by
aunts, uncles, cousins, nieces, nephews or any other family
relationship not directly above or below the individual
investor;
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a
family investment vehicle, including foundations, limited
partnerships and personal holding companies, but only if the
beneficial owners of the vehicle consist solely of the investor or
members of the investor’s
household as described above; and
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a
trust where the grantors and/or beneficiaries of the trust consist
solely of the investor or members of the
investor’s
household as described above; provided that, purchases of the notes
by a trust generally cannot be aggregated together with any
purchases made by a trustee’s
personal account.
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|
Accelerated
Return Notes®
|
TS-12
|
|
Accelerated
Return Notes®
Linked
to the S&P
500® Index,
due January
28,
2022
|
|
The
notes are our debt securities, the return on which is linked to
the performance of
the Index. The
related guarantees are BAC’s
obligations. 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 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, resulted 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
Index 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 MLPF&S, 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 Index, 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.
BofAS
has advised us that the hedging arrangements will include a
hedging-related
charge of approximately $0.05 per
unit, reflecting an estimated
profit to be credited to BofAS
from these transactions. Since hedging entails risk and may
be influenced by unpredictable market forces, additional profits
and losses from these hedging arrangements
may be realized by BofAS
or any third party hedge providers.
For
further information, see “Risk
Factors—General Risks Relating to ARNs” beginning
on page PS-7 and “Use
of Proceeds” on
page PS-22 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 term sheet 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 term sheet 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
MLPF&S and as special tax counsel to BofA Finance and
BAC.
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Accelerated
Return Notes®
|
TS-13
|
|
Accelerated
Return Notes®
Linked
to the S&P
500® Index,
due January
28,
2022
|
|
Summary
Tax Consequences
You
should consider the U.S. federal income tax consequences of an
investment in the notes, including the
following:
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There
is no statutory, judicial, or administrative authority directly
addressing the characterization of the notes.
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You
agree with us (in the absence of an administrative determination,
or judicial ruling to the contrary) to characterize and treat the
notes for all tax purposes as a single financial contract with
respect to the Index.
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Under
this characterization and tax treatment of the notes, a U.S. Holder
(as defined beginning on
page 38 of
the prospectus)
generally will recognize capital gain or loss upon maturity or upon
a sale 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.
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No
assurance can be given that the Internal
Revenue Service (“IRS”) or
any court will agree with this characterization and tax
treatment.
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Under
current IRS guidance, withholding on “dividend equivalent” payments
(as discussed in the product supplement), if any, will not apply to
notes that are issued as of the date
of this term sheet unless
such notes are “delta-one” instruments.
|
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-38 of
product supplement EQUITY
ARN-1.
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.
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Accelerated
Return Notes®
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TS-14
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