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.
|
•
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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.
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Valuation- and Market-related Risks
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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.
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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.
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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.
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Conflict-related Risks
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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
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-9
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Contingent Income Issuer Callable Yield Notes Linked to the 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.
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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
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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.
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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.
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Tax-related Risks
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The U.S. federal income tax consequences of an
investment in the Notes are uncertain, and may be adverse to a holder of the Notes. No statutory, judicial, or administrative
authority directly addresses the characterization of the Notes or securities similar to the Notes for U.S. federal income tax purposes.
As a result, significant aspects of the U.S. federal income tax consequences of an investment in the Notes are not certain. Under
the terms of the Notes, you will have agreed with us to treat the Notes as contingent income-bearing single financial contracts,
as described below under “U.S. Federal Income Tax Summary—General.” If the Internal Revenue Service (the “IRS”)
were successful in asserting an alternative characterization for the Notes, the timing and character of income, gain or loss with
respect to the Notes may differ. No ruling will be requested from the IRS with respect to the Notes and no assurance can be given
that the IRS will agree with the statements made in the section entitled “U.S. Federal Income Tax Summary.” You
are urged to consult with your own tax advisor regarding all aspects of the U.S. federal income tax consequences of investing in
the Notes.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-11
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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
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float-adjusted market capitalization above US$400 million and
float-adjusted liquidity ratio above 150%.
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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:
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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.
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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.
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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
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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
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replicating the index weight of a company may be excluded from the eligible universe
or removed from the Underlying Index.
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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.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-13
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Contingent Income Issuer Callable Yield Notes Linked to the 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.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-14
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Contingent Income Issuer Callable Yield Notes Linked to the 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.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-15
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Contingent Income Issuer Callable Yield Notes Linked to the 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.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-16
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Contingent Income Issuer Callable Yield Notes Linked to the 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.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-17
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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.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-18
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Contingent Income Issuer Callable Yield Notes Linked to the 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:
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●
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sponsor,
endorse, sell or promote the Notes.
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●
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recommend
that any person invest in the Notes or any other securities.
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●
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have
any responsibility or liability for or make any decisions about the timing, amount or pricing of the Notes.
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●
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have
any responsibility or liability for the administration, management or marketing of the Notes.
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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.
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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.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-19
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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.”
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-20
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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.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-21
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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.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-22
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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.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-23
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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.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-24
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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
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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
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-26
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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.
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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:
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•
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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:
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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.
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CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-28
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