
Linked to the Least Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX 50®
Index
|
• |
Approximate 2 year term if not called prior to
maturity. |
|
• |
Payments on the Notes
will depend on the individual performance of the SPDR® S&P®
Regional Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index (each an “Underlying”). |
|
• |
Contingent coupon rate of 9.55% per annum (2.3875% per quarter)
payable quarterly if the Observation Value of each
Underlying on the applicable Observation Date is greater than or
equal to 65% of its Starting Value. |
|
• |
Beginning on March 1, 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 any
Underlying declines by more than 35% from its 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 each Underlying on the final Observation Date is greater
than or equal to 65% 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 24, 2020, will issue on November 30,
2020 and will mature on November 30, 2022. |
|
• |
The Notes will not be listed on any securities
exchange. |
The initial estimated value of the Notes as of the pricing date
is $962.30 per $1,000 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-23 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-28) 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 |
$5,232,000.00 |
$91,560.00 |
$5,140,440.00 |
|
(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 Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
Terms of the Notes
The Contingent Income Issuer Callable Yield Notes Linked to the
Least Performing of the SPDR® S&P® Regional Banking ETF, the
Russell 2000® Index and the EURO STOXX 50® Index (the “Notes”)
provide a quarterly Contingent Coupon Payment of $23.875 on the
applicable Contingent Payment Date if, on any quarterly Observation
Date, the Observation Value of each Underlying is greater
than or equal to its Coupon Barrier. Prior to the maturity date,
beginning on March 1, 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 Least Performing Underlying
declines by more than 35% from its Starting Value, there is full
exposure to declines in the Least Performing Underlying, 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 each Underlying
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 Underlyings, 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. |
Underlyings: |
The SPDR® S&P® Regional Banking ETF (the “KRE”) (Bloomberg
symbol: “KRE”), the Russell 2000® Index (the “RTY”) (Bloomberg
symbol: “RTY”), and the EURO STOXX 50® Index (the “SX5E”)
(Bloomberg symbol: “SX5E”). |
Pricing Date: |
November 24, 2020 |
Issue Date: |
November 30, 2020 |
Valuation Date: |
November 25, 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 30, 2022 |
Starting Value: |
KRE: $50.93
RTY: 1,853.532
SX5E: 3,507.98
|
Observation Value: |
With respect to the KRE, its Closing Market Price on the applicable
Observation Date multiplied by its Price Multiplier on that day, as
determined by the calculation agent. With respect to
each of the RTY and the SX5E, the closing level of such Underlying
on the applicable Observation Date, as determined by the
calculation agent. |
Price Multiplier: |
With respect to the KRE, 1, subject to adjustment for certain
events as described in "Description of the Notes — Anti-Dilution
and Discontinuance Adjustments Relating to ETFs" beginning on page
PS-27 of product supplement EQUITY-1. |
Ending Value: |
With respect to the KRE, its Closing Market Price on the Valuation
Date, multiplied by its Price Multiplier, as determined by the
calculation agent. With respect to each of the RTY and the SX5E,
the closing level of such Underlying on the Valuation Date, as
determined by the calculation agent. |
Coupon Barrier: |
KRE: $33.10, which is 65% of its Starting Value (rounded to two
decimal places).
RTY: 1,204.796, which is 65% of its Starting Value (rounded to
three decimal places).
SX5E: 2,280.19, which is 65% of its Starting Value (rounded to two
decimal places).
|
Threshold Value: |
KRE: $33.10, which is 65% of its Starting Value (rounded to two
decimal places).
RTY: 1,204.796, which is 65% of its Starting Value (rounded to
three decimal places).
SX5E: 2,280.19, which is 65% of its Starting Value (rounded to two
decimal places).
|
Contingent Coupon Payment: |
If, on any quarterly Observation Date, the Observation Value of
each Underlying is greater than or equal to its Coupon
Barrier, we will pay a Contingent Coupon Payment of $23.875 per
$1,000 in principal amount of Notes (equal to a rate of 2.3875% per
quarter or 9.55% per annum) on the applicable Contingent Payment
Date. |
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES
| PS-2 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
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 each Underlying on the
corresponding Observation Date is greater than or equal to its
Coupon Barrier.
|
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 of the Least Performing Underlying is greater than
or equal to its Threshold Value:
$1,000; or
b)
If
the Ending Value of the Least Performing Underlying is less than
its Threshold Value:
$1,000 + ($1,000 x Underlying Return of the Least Performing
Underlying)
In this case, the Redemption Amount will be less than 65% of
the principal amount and could be zero.
The Redemption Amount will also include the final Contingent Coupon
Payment if the Ending Value of the Least Performing Underlying is
greater than or equal to its Coupon Barrier.
|
Observation Dates: |
As set forth on page PS-4. |
Contingent Payment Dates: |
As set forth on page PS-4. |
Call Dates: |
The quarterly Contingent Payment Dates beginning on March 1, 2021
and ending on August 29, 2022. |
Calculation Agent: |
BofA Securities, Inc. (“BofAS”), an affiliate of BofA
Finance. |
Selling Agent: |
BofAS |
CUSIP: |
09709T2T7 |
Underlying Return: |
With respect to each Underlying, 
|
Least Performing Underlying: |
The Underlying with the lowest Underlying 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 values of the Underlyings
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 Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
Observation Dates and Contingent Payment Dates
Observation Dates* |
|
Contingent Payment Dates |
February
24, 2021 |
|
March
1, 2021 |
May
24, 2021 |
|
May
27, 2021 |
August
24, 2021 |
|
August
27, 2021 |
November
24, 2021 |
|
November
30, 2021 |
February
24, 2022 |
|
March
1, 2022 |
May
24, 2022 |
|
May
27, 2022 |
August
24, 2022 |
|
August
29, 2022 |
November
25, 2022 ( the “Valuation Date”) |
|
November
30, 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” beginning on page PS-22 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 Underlyings. 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-23.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES
| PS-4 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
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 Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
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 $23.875, depending on how many
Contingent Coupon Payments are payable prior to an Optional Early
Redemption or maturity. Depending on the performance of the
Underlyings, 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 |
$47.75 |
4 |
$95.50 |
6 |
$143.25 |
8 |
$191.00 |
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES
| PS-6 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
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
for the Least Performing Underlying, a hypothetical Coupon Barrier
of 65 for the Least Performing Underlying, a hypothetical Threshold
Value of 65 for the Least Performing Underlying, the Contingent
Coupon Payment of $23.875 per $1,000 in principal amount of Notes
and a range of hypothetical Ending Values of the Least Performing
Underlying. The actual amount you receive and the resulting
return will depend on the actual Starting Values, Coupon Barriers,
Threshold Values, Observation Values and Ending Values of the
Underlyings, 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 values of the Underlyings, see “The Underlyings”
section below. The Ending Value will not include any income
generated by dividends paid on the Underlying or the stocks
included in or represented by that Underlying, which you would
otherwise be entitled to receive if you invested in the Underlying
or those stocks directly. In addition, all payments on the Notes
are subject to Issuer and Guarantor credit risk.
Ending Value of the
Least Performing Underlying |
Underlying Return of the
Least Performing Underlying |
Redemption Amount per Note (including any final Contingent
Coupon Payment) |
Return
on the Notes(1) |
160.00 |
60.00% |
$1,023.875(2) |
2.3875% |
150.00 |
50.00% |
$1,023.875 |
2.3875% |
140.00 |
40.00% |
$1,023.875 |
2.3875% |
130.00 |
30.00% |
$1,023.875 |
2.3875% |
120.00 |
20.00% |
$1,023.875 |
2.3875% |
110.00 |
10.00% |
$1,023.875 |
2.3875% |
105.00 |
5.00% |
$1,023.875 |
2.3875% |
102.00 |
2.00% |
$1,023.875 |
2.3875% |
100.00(3) |
0.00% |
$1,023.875 |
2.3875% |
95.00 |
-5.00% |
$1,023.875 |
2.3875% |
90.00 |
-10.00% |
$1,023.875 |
2.3875% |
85.00 |
-15.00% |
$1,023.875 |
2.3875% |
65.00(4) |
-35.00% |
$1,023.875 |
2.3875% |
64.99 |
-35.01% |
$649.900 |
-35.0100% |
50.00 |
-50.00% |
$500.000 |
-50.0000% |
0.00 |
-100.00% |
$0.000 |
-100.0000% |
|
(1) |
The
“Return on the Notes” is calculated based on the Redemption Amount,
which includes the final Contingent Coupon Payment (if payable) but
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 each Underlying is set forth on page
PS-2. |
|
(4) |
This
is the hypothetical Coupon Barrier and Threshold Value of
the Least Performing Underlying. |
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES
| PS-7 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
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-29 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 of any Underlying is less than its
Threshold Value, you will lose 1% of the principal amount for each
1% that the Ending Value of the Least Performing Underlying is less
than its Starting Value. In that case, at maturity, you will lose a
significant portion or all of your principal amount 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 of any Underlying
exceeds its 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 of any Underlying exceeds its
Starting Value. In contrast, a direct investment in an Underlying
or in the securities included in one or more of the Underlyings
would allow you to receive the benefit of any appreciation in their
prices. Thus, any return on the Notes will not reflect the return
you would realize if you actually owned those securities and
received the dividends paid or distributions made on
them. |
|
• |
The
Contingent Coupon Payment, Early Redemption Amount or Redemption
Amount, as applicable, will not reflect the values of the
Underlyings other than on the Observation Dates. The values of
the Underlyings 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 Underlyings while holding the Notes, as
the performance of the Underlyings may influence the market value
of 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 for each Underlying. No other values of the
Underlyings will be taken into account. As a result, if the Notes
are not called prior to maturity, and the Ending Value of the Least
Performing Underlying is less than its Threshold Value, you will
receive less than the principal amount at maturity even if the
value of each Underlying was always above its Threshold Value prior
to the Valuation Date. |
|
• |
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 three 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 of any Underlying is less
than its Coupon Barrier on an Observation Date, you will not
receive the Contingent Coupon Payment applicable to that
Observation Date. If the Observation Value of any Underlying is
less than its Coupon Barrier on all the Observation Dates during
the term of the Notes, you will not receive any Contingent Coupon
Payments during the term of the Notes, and will not receive a
positive return on the Notes. |
|
• |
Because
the Notes are linked to the least performing (and not the average
performance) of the Underlyings, you may not receive any return on
the Notes and may lose a significant portion or all of your
principal amount even if the Observation Value or Ending Value of
one Underlying is always greater than or equal to its Coupon
Barrier or Threshold Value, as applicable. Your Notes are
linked to the least performing of the Underlyings, and a change in
the value of one Underlying may not correlate with changes in the
value of the other Underlying(s). The Notes are not linked to a
basket composed of the Underlyings, where the depreciation in the
value of one Underlying could be offset to some extent by the
appreciation in the value of the other Underlying(s). In the case
of the Notes, the individual performance of each Underlying would
not be combined, and the depreciation in the value of one
Underlying would not be offset by any appreciation in the value of
the other Underlying(s). Even if the Observation Value of an
Underlying is at or above its Coupon Barrier on an Observation
Date, you will not receive the Contingent Coupon Payment with
respect to that Observation Date if the Observation Value of
another Underlying is below its Coupon Barrier on that day. In
addition, even if the Ending Value of an Underlying is at or above
its Threshold Value, you will lose a portion or all of your
principal if the Ending Value of the Least Performing Underlying is
below its Threshold Value. |
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES
| PS-8 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
|
• |
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 of the Least
Performing Underlying as compared to its Starting
Value. |
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 values
of the Underlyings, 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 values of the Underlyings, 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 Underlyings, 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 an
Underlying or the securities held by or included in the
Underlyings, or futures or options contracts on the Underlyings or
those securities, or other listed or over-the-counter derivative
instruments linked to the Underlyings or those securities. While
we, the Guarantor or one or more of our other affiliates, including
BofAS, may from time to time own securities represented by the
Underlyings, except to the extent that BAC’s common stock may be
included in the Underlyings, we, the Guarantor and our other
affiliates, including BofAS, do not control any company included in
the Underlyings, and have not verified any disclosure made by any
other company. 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
value of the Underlyings in a manner that could be adverse to
your |
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES
| PS-9 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
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 value of the Underlyings.
Consequently, the value of the Underlyings 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 value of the Underlyings 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 value of the
Underlyings, the market value of your Notes prior to maturity or
the amounts payable on the Notes.
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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. 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. |
Underlying-related Risks
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• |
The
performance of the KRE may not correlate with the performance of
its underlying index (the “Underlying Index”) as well as the net
asset value per share of the KRE, especially during periods of
market volatility. The performance of the KRE and that of its
Underlying Index generally will vary due to, for example,
transaction costs, management fees, certain corporate actions, and
timing variances. Moreover, it is also possible that the
performance of the KRE may not fully replicate or may, in certain
circumstances, diverge significantly from the performance of its
Underlying Index. This could be due to, for example, the KRE not
holding all or substantially all of the underlying assets included
in the Underlying Index and/or holding assets that are not included
in the Underlying Index, the temporary unavailability of certain
securities in the secondary market, the performance of any
derivative instruments held by the KRE, differences in trading
hours between the KRE (or the underlying assets held by the KRE)
and the Underlying Index, or due to other circumstances. This
variation in performance is called the “tracking error,” and, at
times, the tracking error may be significant. In addition, because
the shares of the KRE are traded on a securities exchange and are
subject to market supply and investor demand, the market price of
one share of the KRE may differ from its net asset value per share;
shares of the KRE may trade at, above, or below its net asset value
per share. During periods of market volatility, securities held by
the KRE may be unavailable in the secondary market, market
participants may be unable to calculate accurately the net asset
value per share of the KRE and the liquidity of the KRE may be
adversely affected. Market volatility may also disrupt the ability
of market participants to trade shares of the KRE. Further, market
volatility may adversely affect, sometimes materially, the prices
at which market participants are willing to buy and sell shares of
the KRE. As a result, under these circumstances, the market value
of shares of the KRE may vary substantially from the net asset
value per share of the KRE. |
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• |
The
stocks held by the KRE are concentrated in one sector. The KRE
holds securities issued by companies in the financial services
sector. As a result, the stocks that will in part determine the
performance of the Notes are concentrated in one sector. Although
an investment in the Notes will not give holders any ownership or
other direct interests in the securities held by the KRE, the
return on an investment in the Notes will be subject to certain
risks associated with a direct equity investment in companies in
the financial sector. Accordingly, by investing in the Notes, you
will not fully benefit from the diversification which could result
from an investment linked to companies that operate in multiple
sectors. |
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• |
Economic
conditions may adversely affect the stock prices of many companies
in the financial services sector and may reduce the return on the
Notes. In recent years, economic conditions in the United
States have resulted, and may continue to result, in significant
losses among many companies that operate in the financial services
sector. These conditions have also resulted, and may continue to
result, in a high degree of volatility in the stock prices of
financial institutions, and substantial fluctuations in the
profitability of these companies. Numerous financial services
companies have experienced substantial decreases in the value of
their assets, taken action to raise capital (including the issuance
of debt or equity securities), or even ceased operations. Further,
companies in the financial services sector have been subject to
unprecedented government actions and regulation, which may limit
the scope of their operations, the types of loans and other
financial commitments they can make, the interest rates and fees
they can charge, the prices they can charge and the amount of
capital they must maintain, and, in turn, result in a decrease in
value of these companies. Any of these factors may have an adverse
impact on the price of the KRE. As a result, the price of
the KRE may be adversely affected by economic, political,
or regulatory events affecting the financial services sector or one
of the sub-sectors of the financial services sector. This in turn
could adversely impact the value of the notes. |
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• |
The
anti-dilution adjustments will be limited. The calculation
agent may adjust the Price Multiplier of the KRE and other terms of
the Notes to reflect certain corporate actions by the KRE, as
described in the section “Description of the Notes—Anti-Dilution
and Discontinuance Adjustments Relating to ETFs” in the
accompanying product supplement. The calculation agent will not be
required to make an adjustment for every event that may affect the
KRE and will have broad discretion to determine whether and to what
extent an adjustment is required. |
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• |
The
Notes are subject to risks associated with small-size
capitalization companies. The stocks comprising the RTY are
issued by companies with small-sized market capitalization. The
stock prices of small-size companies may be more volatile than
stock prices of large capitalization companies. Small-size
capitalization companies may be less able to withstand adverse
economic, market, trade and competitive conditions |
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES
| PS-10 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
relative to larger companies. Small-size capitalization companies
may also be more susceptible to adverse developments related to
their products or services.
|
• |
The
Notes are subject to risks associated with foreign securities
markets. The SX5E include certain foreign equity securities.
You should be aware that investments in securities linked to the
value of foreign equity securities involve particular risks. The
foreign securities markets comprising the SX5E may have less
liquidity and may be more volatile than U.S. or other securities
markets and market developments may affect foreign markets
differently from U.S. or other securities markets. Direct or
indirect government intervention to stabilize these foreign
securities markets, as well as cross-shareholdings in foreign
companies, may affect trading prices and volumes in these markets.
Also, there is generally less publicly available information about
foreign companies than about those U.S. companies that are subject
to the reporting requirements of the SEC, and foreign companies are
subject to accounting, auditing and financial reporting standards
and requirements that differ from those applicable to U.S.
reporting companies. Prices of securities in foreign countries are
subject to political, economic, financial and social factors that
apply in those geographical regions. These factors, which could
negatively affect those securities markets, include the possibility
of recent or future changes in a foreign government’s economic and
fiscal policies, the possible imposition of, or changes in,
currency exchange laws or other laws or restrictions applicable to
foreign companies or investments in foreign equity securities and
the possibility of fluctuations in the rate of exchange between
currencies, the possibility of outbreaks of hostility and political
instability and the possibility of natural disaster or adverse
public health developments in the region. Moreover, foreign
economies may differ favorably or unfavorably from the U.S. economy
in important respects such as growth of gross national product,
rate of inflation, capital reinvestment, resources and
self-sufficiency. |
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• |
The
publisher, sponsor or investment advisor of an Underlying may
adjust that Underlying in a way that affects its values, and the
investment advisor, sponsor or publisher has no obligation to
consider your interests. The investment advisor, sponsor or the
publisher of an Underlying can add, delete, or substitute the
components included in that Underlying or make other methodological
changes that could change its value. Any of these actions could
adversely affect the value of your Notes. |
Tax-related Risks
|
• |
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. |
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES
| PS-11 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
The Underlyings
All disclosures contained in this pricing supplement regarding the
Underlyings, including, without limitation, their make-up, method
of calculation, and changes in their components, have been derived
from publicly available sources. The information reflects the
policies of, and is subject to change by each of, SSGA Funds
Management Inc., the investment advisor of the KRE, FTSE Russell,
the sponsor of the RTY, and STOXX Limited (“STOXX”), the sponsor of
the SX5E. We refer to SSGA Funds Management Inc. as the “Investment
Advisor”. We refer to FTSE Russell and STOXX as the “Underlying
Sponsors.” The Investment Advisor and Underlying Sponsors, which
license the copyright and all other rights to the Underlyings, have
no obligation to continue to publish, and may discontinue
publication of, the Underlyings. The consequences of any Investment
Advisor or Underlying Sponsor discontinuing publication of the
applicable Underlying are discussed in “Description of the Notes—
Discontinuance of an Index” and in “Description of the Notes—
Anti-Dilution and Discontinuance Adjustments Relating to ETFs—
Discontinuance of or Material Change to an ETF” in the accompanying
product supplement. None of us, the Guarantor, the calculation
agent, or BofAS accepts any responsibility for the calculation,
maintenance or publication of any Underlying or any successor
Underlying. None of us, the Guarantor, BofAS or any of our other
affiliates makes any representation to you as to the future
performance of the Underlyings. You should make your own
investigation into the Underlyings.
The SPDR® S&P® Regional Banking ETF
The KRE seeks to provide investment results that correspond
generally to the price and yield performance, before fees and
expenses, of the S&P Regional Banks Select Industry Index (the
“Underlying Index”). The Underlying Index represents the regional
banks industry portion of the S&P® Total Market Index
(“S&P TMI”), an index that measures the performance of the U.S.
equity market. The KRE is composed of companies that are regional
banks.
The KRE utilizes a “replication” investment approach in attempting
to track the performance of the Underlying Index. The KRE typically
invests in substantially all of the securities which comprise the
Underlying Index in approximately the same proportions as the
Underlying Index. The KRE will normally invest at least 80% of its
total assets in the common stocks that comprise the Underlying
Index. The returns of the KRE may be affected by certain management
fees and other expenses, which are detailed in its prospectus.
The S&P Regional Banks
Select Industry Index
This Underlying Index is an equal-weighted index that is designed
to measure the performance of the regional banks portion of the
S&P TMI. The S&P TMI includes all U.S. common equities
listed on the New York Stock Exchange (including NYSE Arca), the
NYSE MKT, the NASDAQ Global Select Market, and the NASDAQ Capital
Market. Each of the component stocks in the Underlying Index is a
constituent company within the regional banks industry portion of
the S&P TMI.
To be eligible for inclusion in the Underlying Index, companies
must be in the S&P TMI and must be included in the relevant
Global Industry Classification Standard (GICS) industry. The GICS
was developed to establish a global standard for categorizing
companies into sectors and industries. In addition to the above,
companies must satisfy one of the two following combined size and
liquidity criteria:
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|
•
float-adjusted market
capitalization above US$500 million and float-adjusted liquidity
ratio above 90%; or
•
float-adjusted market
capitalization above US$400 million and float-adjusted liquidity
ratio above 150%.
|
All U.S. companies satisfying these requirements are included in
the Underlying Index. The total number of companies in the
Underlying Index should be at least 35. If there are fewer than 35
stocks, stocks from a supplementary list of highly correlated
sub-industries that meet the market capitalization and liquidity
thresholds above are included in the order of their float-adjusted
market capitalization to reach 35 constituents. Minimum market
capitalization requirements may be relaxed to ensure there are at
least 22 companies in the Underlying Index as of each rebalancing
effective date.
Eligibility factors include:
|
|
•
Market
Capitalization: Float-adjusted market capitalization should be at
least US$400 million for inclusion in the Underlying Index.
Existing index components must have a float-adjusted market
capitalization of US$300 million to remain in the Underlying Index
at each rebalancing.
•
Liquidity: The
liquidity measurement used is a liquidity ratio, defined as dollar
value traded over the previous 12-months divided by the
float-adjusted market capitalization as of the Underlying Index
rebalancing reference date. Stocks having a float-adjusted market
capitalization above US$500 million must have a liquidity ratio
greater than 90% to be eligible for addition to the Underlying
Index. Stocks having a float-adjusted market capitalization between
US$400 and US$500 million must have a liquidity ratio greater than
150% to be eligible for addition to the Underlying Index. Existing
index constituents must have a liquidity ratio greater than 50% to
remain in the Underlying Index at the quarterly rebalancing. The
length of time to evaluate liquidity is reduced to the available
trading period for IPOs or spin-offs that do not have 12 months of
trading history.
•
Takeover
Restrictions: At the discretion of S&P®, constituents with
shareholder ownership restrictions defined in company bylaws may be
deemed ineligible for inclusion in the Underlying Index. Ownership
restrictions preventing entities from
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|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES
| PS-12 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
|
|
replicating the index weight of a company may be excluded
from the eligible universe or removed from the Underlying
Index.
•
Turnover:
S&P® believes turnover in index membership should be
avoided when possible. At times, a company may appear to
temporarily violate one or more of the addition criteria. However,
the addition criteria are for addition to the Underlying Index, not
for continued membership. As a result, an index constituent that
appears to violate the criteria for addition to the Underlying
Index will not be deleted unless ongoing conditions warrant a
change in the composition of the Underlying Index.
|
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES
| PS-13 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
Historical Performance of the
KRE
The following graph sets forth the daily historical performance of
the KRE 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 horizontal orange line
in the graph represents the KRE’s Coupon Barrier and Threshold
Value of $33.10 (rounded to two decimal places), which is 65% of
the KRE’s Starting Value of $50.93.

This historical data on the KRE is not necessarily indicative of
the future performance of the KRE or what the value of the Notes
may be. Any historical upward or downward trend in the Closing
Market Price of the KRE during any period set forth above is not an
indication that the Closing Market Price of the KRE 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
patterns of the KRE.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES
| PS-14 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
The Russell 2000® Index
The RTY was developed by Russell Investments (“Russell”) before
FTSE International Limited and Russell combined in 2015 to create
FTSE Russell, which is wholly owned by London Stock Exchange Group.
Additional information on the RTY is available at the following
website: http://www.ftserussell.com. No information on that website
is deemed to be included or incorporated by reference in this
pricing supplement.
Russell began dissemination of the RTY (Bloomberg L.P. index symbol
“RTY”) on January 1, 1984. FTSE Russell calculates and publishes
the RTY. The RTY was set to 135 as of the close of business on
December 31, 1986. The RTY is designed to track the performance of
the small capitalization segment of the U.S. equity market. As a
subset of the Russell 3000® Index, the RTY consists of the smallest
2,000 companies included in the Russell 3000® Index. The Russell
3000® Index measures the performance of the largest 3,000 U.S.
companies, representing approximately 98% of the investable U.S.
equity market. The RTY is determined, comprised, and calculated by
FTSE Russell without regard to the Notes.
Selection of Stocks Comprising the RTY
All companies eligible for inclusion in the RTY must be classified
as a U.S. company under FTSE Russell’s country-assignment
methodology. If a company is incorporated, has a stated
headquarters location, and trades in the same country (American
Depositary Receipts and American Depositary Shares are not
eligible), then the company is assigned to its country of
incorporation. If any of the three factors are not the same, FTSE
Russell defines three Home Country Indicators (“HCIs”): country of
incorporation, country of headquarters, and country of the most
liquid exchange (as defined by a two-year average daily dollar
trading volume) (“ADDTV”) from all exchanges within a country.
Using the HCIs, FTSE Russell compares the primary location of the
company’s assets with the three HCIs. If the primary location of
its assets matches any of the HCIs, then the company is assigned to
the primary location of its assets. If there is insufficient
information to determine the country in which the company’s assets
are primarily located, FTSE Russell will use the country from which
the company’s revenues are primarily derived for the comparison
with the three HCIs in a similar manner. FTSE Russell uses the
average of two years of assets or revenues data to reduce potential
turnover. If conclusive country details cannot be derived from
assets or revenues data, FTSE Russell will assign the company to
the country of its headquarters, which is defined as the address of
the company’s principal executive offices, unless that country is a
Benefit Driven Incorporation “BDI” country, in which case the
company will be assigned to the country of its most liquid stock
exchange. BDI countries include: Anguilla, Antigua and Barbuda,
Bahamas, Barbados, Belize, Bermuda, Bonaire, British Virgin
Islands, Cayman Islands, Channel Islands, Cook Islands, Curacao,
Faroe Islands, Gibraltar, Guernsey, Isle of Man, Jersey, Liberia,
Marshall Islands, Panama, Saba, Sint Eustatius, Sint Maarten, and
Turks and Caicos Islands. For any companies incorporated or
headquartered in a U.S. territory, including Puerto Rico, Guam, and
U.S. Virgin Islands, a U.S. HCI is assigned.
All securities eligible for inclusion in the RTY must trade on a
major U.S. exchange. Stocks must have a closing price at or above
$1.00 on their primary exchange on the last trading day in May to
be eligible for inclusion during annual reconstitution. However, in
order to reduce unnecessary turnover, if an existing member’s
closing price is less than $1.00 on the last day of May, it will be
considered eligible if the average of the daily closing prices
(from its primary exchange) during the month of May is equal to or
greater than $1.00. Initial public offerings are added each quarter
and must have a closing price at or above $1.00 on the last day of
their eligibility period in order to qualify for index inclusion.
If an existing stock does not trade on the “rank day” (typically
the last trading day in May but a confirmed timetable is announced
each spring) but does have a closing price at or above $1.00 on
another eligible U.S. exchange, that stock will be eligible for
inclusion.
An important criterion used to determine the list of securities
eligible for the RTY is total market capitalization, which is
defined as the market price as of the last trading day in May for
those securities being considered at annual reconstitution times
the total number of shares outstanding. Where applicable, common
stock, non-restricted exchangeable shares and partnership
units/membership interests are used to determine market
capitalization. Any other form of shares such as preferred stock,
convertible preferred stock, redeemable shares, participating
preferred stock, warrants and rights, installment receipts or trust
receipts, are excluded from the calculation. If multiple share
classes of common stock exist, they are combined. In cases where
the common stock share classes act independently of each other
(e.g., tracking stocks), each class is considered for inclusion
separately. If multiple share classes exist, the pricing vehicle
will be designated as the share class with the highest two-year
trading volume as of the rank day in May.
Companies with a total market capitalization of less than $30
million are not eligible for the RTY. Similarly, companies with
only 5% or less of their shares available in the marketplace are
not eligible for the RTY. Royalty trusts, limited liability
companies, closed-end investment companies (companies that are
required to report Acquired Fund Fees and Expenses, as defined by
the SEC, including business development companies), blank check
companies, special purpose acquisition companies, and limited
partnerships are also ineligible for inclusion. Bulletin board,
pink sheets, and over-the-counter (“OTC”) traded securities are not
eligible for inclusion. Exchange traded funds and mutual funds are
also excluded.
Annual reconstitution is a process by which the RTY is completely
rebuilt. Based on closing levels of the company’s common stock on
its primary exchange on the rank day of May of each year, FTSE
Russell reconstitutes the composition of the RTY using the then
existing market capitalizations of eligible companies.
Reconstitution of the RTY occurs on the last Friday in June or,
when the last Friday in June is the 29th or 30th, reconstitution
occurs on the prior Friday. In addition, FTSE Russell adds initial
public offerings to the RTY on a quarterly basis based on total
market capitalization ranking within the market-adjusted
capitalization breaks established during the most recent
reconstitution. After membership is determined, a security’s shares
are adjusted to include only those shares available to the public.
This is often referred to as “free float.” The purpose of the
adjustment is to exclude from market calculations the
capitalization that is not available for purchase and is not part
of the investable opportunity set.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES
| PS-15 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
Historical Performance of the RTY
The following graph sets forth the daily historical performance of
the RTY 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 horizontal orange line
in the graph represents the RTY’s Coupon Barrier and Threshold
Value of 1,204.796 (rounded to three decimal places), which is 65%
of the RTY’s Starting Value of 1,853.532.

This historical data on the RTY is not necessarily indicative of
the future performance of the RTY or what the value of the Notes
may be. Any historical upward or downward trend in the level of the
RTY during any period set forth above is not an indication that the
level of the RTY 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 RTY.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES
| PS-16 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
License Agreement
“Russell 2000®”
and “Russell 3000®” are trademarks of FTSE
Russell and have been licensed for use by our affiliate, Merrill
Lynch, Pierce, Fenner & Smith Incorporated. The Notes are not
sponsored, endorsed, sold, or promoted by FTSE Russell, and FTSE
Russell makes no representation regarding the advisability of
investing in the Notes.
FTSE Russell and Merrill Lynch, Pierce, Fenner & Smith
Incorporated have entered into a non-exclusive license agreement
providing for the license to Merrill Lynch, Pierce, Fenner &
Smith Incorporated and its affiliates, including us, in exchange
for a fee, of the right to use indices owned and published by FTSE
Russell in connection with some securities, including the Notes.
The license agreement provides that the following language must be
stated in this pricing supplement:
The Notes are not sponsored, endorsed, sold, or promoted by FTSE
Russell. FTSE Russell makes 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 RTY to track
general stock market performance or a segment of the same. FTSE
Russell’s publication of the RTY in no way suggests or implies an
opinion by FTSE Russell as to the advisability of investment in any
or all of the securities upon which the RTY is based. FTSE
Russell’s only relationship to Merrill Lynch, Pierce, Fenner &
Smith Incorporated and to us is the licensing of certain trademarks
and trade names of FTSE Russell and of the RTY, which is
determined, composed, and calculated by FTSE Russell without regard
to Merrill Lynch, Pierce, Fenner & Smith Incorporated, us, or
the Notes. FTSE Russell is not responsible for and has not reviewed
the Notes nor any associated literature or publications and FTSE
Russell makes no representation or warranty express or implied as
to their accuracy or completeness, or otherwise. FTSE Russell
reserves the right, at any time and without notice, to alter,
amend, terminate, or in any way change the RTY. FTSE Russell has no
obligation or liability in connection with the administration,
marketing, or trading of the Notes.
FTSE RUSSELL DOES NOT GUARANTEE THE ACCURACY AND/OR THE
COMPLETENESS OF THE RTY OR ANY DATA INCLUDED THEREIN AND FTSE
RUSSELL SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR
INTERRUPTIONS THEREIN. FTSE RUSSELL MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY MERRILL LYNCH, PIERCE,
FENNER & SMITH INCORPORATED, US, HOLDERS OF THE NOTES, OR ANY
OTHER PERSON OR ENTITY FROM THE USE OF THE RTY OR ANY DATA INCLUDED
THEREIN. FTSE RUSSELL MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND
EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE RTY OR ANY DATA
INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO
EVENT SHALL FTSE RUSSELL HAVE ANY LIABILITY FOR ANY SPECIAL,
PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST
PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES
| PS-17 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
The EURO STOXX 50® Index
The SX5E was created by STOXX, which is owned by Deutsche Börse AG.
Publication of the SX5E began in February 1998, based on an initial
index level of 1,000 at December 31, 1991.
Index Composition and Maintenance
The SX5E is composed of 50 stocks from 11 Eurozone countries
(Austria, Belgium, Finland, France, Germany, Ireland, Italy,
Luxembourg, the Netherlands, Portugal and Spain) of the STOXX
Europe 600 Supersector indices. The STOXX 600 Supersector indices
contain the 600 largest stocks traded on the major exchanges of 18
European countries and are organized into the following 19
Supersectors: automobiles & parts; banks; basic resources;
chemicals; construction & materials; financial services; food
& beverage; health care; industrial goods & services;
insurance; media; oil & gas; personal & household goods;
real estate; retail; technology; telecommunications; travel &
leisure and utilities.
For each of the 19 EURO STOXX regional supersector indices, the
stocks are ranked in terms of free-float market capitalization. The
largest stocks are added to the selection list until the coverage
is close to, but still less than, 60% of the free-float market
capitalization of the corresponding supersector index. If the next
highest-ranked stock brings the coverage closer to 60% in absolute
terms, then it is also added to the selection list. All current
stocks in the SX5E are then added to the selection list. All of the
stocks on the selection list are then ranked in terms of free-float
market capitalization to produce the final index selection list.
The largest 40 stocks on the selection list are selected; the
remaining 10 stocks are selected from the largest remaining current
stocks ranked between 41 and 60; if the number of stocks selected
is still below 50, then the largest remaining stocks are selected
until there are 50 stocks. In exceptional cases, STOXX’s management
board can add stocks to and remove them from the selection
list.
The index components are subject to a capped maximum index weight
of 10%, which is applied on a quarterly basis.
The composition of the SX5E is reviewed annually, based on the
closing stock data on the last trading day in August. Changes in
the composition of the SX5E are made to ensure that the SX5E
includes the 50 market sector leaders from within the EURO
STOXX®
Index.
The free float factors for each component stock used to calculate
the SX5E, as described below, are reviewed, calculated, and
implemented on a quarterly basis and are fixed until the next
quarterly review.
The SX5E is subject to a “fast exit rule.” The index components are
monitored for any changes based on the monthly selection list
ranking. A stock is deleted from the SX5E if: (a) it ranks 75 or
below on the monthly selection list and (b) it has been ranked 75
or below for a consecutive period of two months in the monthly
selection list. The highest-ranked stock that is not an index
component will replace it. Changes will be implemented on the close
of the fifth trading day of the month, and are effective the next
trading day.
The SX5E is also subject to a “fast entry rule.” All stocks on the
latest selection lists and initial public offering (IPO) stocks are
reviewed for a fast-track addition on a quarterly basis. A stock is
added, if (a) it qualifies for the latest STOXX blue-chip selection
list generated end of February, May, August or November and (b) it
ranks within the “lower buffer” on this selection list.
The SX5E is also reviewed on an ongoing monthly basis. Corporate
actions (including initial public offerings, mergers and takeovers,
spin-offs, delistings, and bankruptcy) that affect the index
composition are announced immediately, implemented two trading days
later and become effective on the next trading day after
implementation.
Index Calculation
The SX5E is calculated with the “Laspeyres formula,” which measures
the aggregate price changes in the component stocks against a fixed
base quantity weight. The formula for calculating the index value
can be expressed as follows:
EURO STOXX 50®
Index = Free float market capitalization of the EURO STOXX
50®
Index
Divisor
The “free float market capitalization of the EURO STOXX
50® Index” is
equal to the sum of the product of the price, the number of shares
and the free float factor and the weighting cap factor for each
component stock as of the time the SX5E is being calculated.
The SX5E is also subject to a divisor, which is adjusted to
maintain the continuity of the index values across changes due to
corporate actions, such as the deletion and addition of stocks, the
substitution of stocks, stock dividends, and stock splits.
Neither we nor any of our affiliates, including BofAS, accepts any
responsibility for the calculation, maintenance, or publication of,
or for any error, omission, or disruption in, the SX5E or any
successor to the SX5E. STOXX does not guarantee the accuracy or the
completeness of the SX5E or any data included in the SX5E. STOXX
assumes no liability for any errors, omissions, or disruption in
the calculation and dissemination of the SX5E. STOXX disclaims all
responsibility for any errors or omissions in the calculation and
dissemination of the SX5E or the manner in which the SX5E is
applied in determining the amount payable on the Notes at
maturity.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES
| PS-18 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
Historical Performance of the
SX5E
The following graph sets forth the daily historical performance of
the SX5E 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 horizontal orange line
in the graph represents the SX5E’s Coupon Barrier and Threshold
Value of 2,280.19 (rounded to two decimal places), which is 65% of
the SX5E’s Starting Value of 3,507.98.

This historical data on the SX5E is not necessarily indicative of
the future performance of the SX5E or what the value of the Notes
may be. Any historical upward or downward trend in the level of the
SX5E during any period set forth above is not an indication that
the level of the SX5E 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 SX5E.
License
Agreement
One of our affiliates has entered into a non-exclusive license
agreement with STOXX providing for the license to it and certain of
its affiliated companies, including us, of the right to use indices
owned and published by STOXX (including the SX5E) in connection
with certain securities, including the Notes.
The license agreement requires that the following language be
stated in this pricing supplement:
“STOXX Limited, Deutsche Börse
Group and their licensors, research partners or data providers have
no relationship to us other than the licensing of the SX5E and the
related trademarks for use in connection with the Notes.
STOXX, Deutsche Börse Group and their licensors, research
partners or data providers do not:
|
● |
sponsor, endorse, sell or promote the Notes. |
|
● |
recommend that any person invest in the Notes or any other
securities. |
|
● |
have any responsibility or liability for or make any decisions
about the timing, amount or pricing of the Notes. |
|
● |
have any responsibility or liability for the administration,
management or marketing of the Notes. |
|
● |
consider the needs of the Notes or the owners of the Notes in
determining, composing or calculating the SX5E or have any
obligation to do so. |
STOXX, Deutsche Börse Group and their licensors, research
partners or data providers give no warranty, and exclude any
liability (whether in negligence or otherwise), in connection with
the Notes or their performance.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES
| PS-19 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
STOXX does not assume any contractual relationship with the
purchasers of the Notes or any other third parties.
Specifically,
●
STOXX, Deutsche Börse Group and their licensors, research partners
or data providers do not give any warranty, express or implied, and
exclude any liability about:
●
The results to be obtained by the Notes, the owner of the Notes or
any other person in connection with the use of the SX5E and the
data included in the SX5E;
●
The
accuracy, timeliness, and completeness of the SX5E and its
data;
●
The
merchantability and the fitness for a particular purpose or use of
the SX5E and its data;
●
The
performance of the Notes generally.
●
STOXX,
Deutsche Börse Group and their licensors, research partners or data
providers give no warranty and exclude any liability, for any
errors, omissions or interruptions in the SX5E or its
data;
●
Under
no circumstances will STOXX, Deutsche Börse Group or their
licensors, research partners or data providers be liable (whether
in negligence or otherwise) for any lost profits or indirect,
punitive, special or consequential damages or losses, arising as a
result of such errors, omissions or interruptions in the SX5E or
its data or generally in relation to the Notes, even in
circumstances where STOXX, Deutsche Börse Group or their licensors,
research partners or data providers are aware that such loss or
damage may occur.
The licensing agreement
discussed above is solely for our benefit and that of STOXX, and
not for the benefit of the owners of the Notes or any other third
parties.”
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES
| PS-20 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
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
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 Underlyings 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.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES
| PS-21 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
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 BofA Finance, as Issuer, or BAC, as
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.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES
| PS-22 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
Structuring the Notes
The Notes are our debt securities, the return on which is linked to
the performance of the Underlyings. 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 Underlyings, 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-19 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.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES
| PS-23 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
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
Underlyings 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 Underlyings. 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 Underlyings 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 an
Underlying or any issuer of a component stock included in an
Underlying that is an index 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
any Underlying or any issuer of one or more stocks included in an
Underlying that is an index were 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 an Underlying or the issuers of the component stocks
included in an Underlying that is an index and consult your tax
advisor regarding the possible consequences to you, if any, if the
issuer of an Underlying or any issuer of a component stock included
in an Underlying that is an index 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 determination or
judicial ruling to the contrary, to treat any Contingent Coupon
Payment as described in the preceding sentence.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES
| PS-24 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
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. Subject to the discussion below
concerning the possible application of the “constructive ownership”
rules of Section 1260 of the Code, 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.
Possible Application of Section 1260 of the Code. Since one
Underlying is the type of financial asset described under Section
1260 of the Code (including, among others, any equity interest in
pass-through entities such as exchange traded funds, regulated
investment companies, real estate investment trusts, partnerships,
and passive foreign investment companies, each a “Section 1260
Financial Asset”), while the matter is not entirely clear, there
may exist a risk that an investment in the Notes will be treated,
in whole or in part, as a “constructive ownership transaction” to
which Section 1260 of the Code applies. If Section 1260 of the Code
applies, all or a portion of any long-term capital gain recognized
by a U.S. Holder in respect of the Notes will be recharacterized as
ordinary income (the “Excess Gain”). In addition, an interest
charge will also apply to any deemed underpayment of tax in respect
of any Excess Gain to the extent such gain would have resulted in
gross income inclusion for the U.S. Holder in taxable years prior
to the taxable year of the sale, exchange, redemption, or
settlement (assuming such income accrued at a constant rate equal
to the applicable federal rate as of the date of sale, exchange,
redemption, or settlement).
If an investment in the Notes is treated as a constructive
ownership transaction, it is not clear to what extent any long-term
capital gain of a U.S. Holder in respect of the Notes will be
recharacterized as ordinary income. It is possible, for example,
that the amount of the Excess Gain (if any) that would be
recharacterized as ordinary income in respect of the Notes will
equal the excess of (i) any long-term capital gain recognized by
the U.S. Holder in respect of the Notes and attributable to Section
1260 Financial Assets, over (ii) the “net underlying long-term
capital gain” (as defined in Section 1260 of the Code) such U.S.
Holder would have had if such U.S. Holder had acquired an amount of
the corresponding Section 1260 Financial Assets at fair market
value on the original issue date for an amount equal to the portion
of the issue price of the Notes attributable to the corresponding
Section 1260 Financial Assets and sold such amount of Section 1260
Financial Assets at maturity or upon sale, exchange, or redemption
of the Notes at fair market value. Unless otherwise established by
clear and convincing evidence, the net underlying long-term capital
gain is treated as zero and therefore it is possible that all
long-term capital gain recognized by a U.S. Holder in respect of
the Notes will be recharacterized as ordinary income if Section
1260 of the Code applies to an investment in the Notes. U.S.
Holders should consult their tax advisors regarding the potential
application of Section 1260 of the Code to an investment in the
Notes.
As described below, the IRS, as indicated in Notice 2008-2 (the
“Notice”), is considering whether Section 1260 of the Code
generally applies or should apply to the Notes, including in
situations where the Underlyings are not the type of financial
asset described under Section 1260 of the Code.
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 Notice 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
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES
| PS-25 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
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.
Because some Underlyings are indices that periodically rebalance,
it is possible that the Notes could be treated as a series of
contingent income-bearing single financial contracts, each of which
matures on the next rebalancing date. If the Notes were properly
characterized in such a manner, a U.S. Holder would be treated as
disposing of the Notes on each rebalancing date in return for new
Notes that mature on the next rebalancing date, and a U.S. Holder
would accordingly likely recognize capital gain or loss on each
rebalancing date equal to the difference between the holder’s tax
basis in the Notes (which would be adjusted to take into account
any prior recognition of gain or loss) and the fair market value of
the Notes on such date.
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.
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 Underlyings 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 Underlyings 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
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES
| PS-26 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
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.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES
| PS-27 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the SPDR® S&P® Regional
Banking ETF, the Russell 2000® Index and the EURO STOXX
50® Index
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:
|
• |
Product Supplement EQUITY-1 dated January 3, 2020: |
https://www.sec.gov/Archives/edgar/data/70858/000119312520001483/d836196d424b5.htm
|
• |
Series A MTN prospectus supplement dated December 31, 2019 and
prospectus dated December 31, 2019: |
https://www.sec.gov/Archives/edgar/data/70858/000119312519326462/d859470d424b3.htm
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.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES
| PS-28 |