This pricing supplement, which is not complete and may be changed,
relates to an effective Registration Statement under the Securities
Act of 1933. This pricing supplement and the accompanying product
supplement, prospectus supplement and prospectus are not an offer
to sell these notes in any country or jurisdiction where such an
offer would not be permitted.

Linked to the Least Performing of the Dow Jones Industrial
Average®, the Russell 2000® Index and the EURO STOXX
50® Index
|
● |
Approximate 15 month
term if not
called prior to maturity. |
|
● |
Payments on the Notes will
depend on the individual performance of the Dow Jones
Industrial Average®, the Russell 2000® Index and
the EURO STOXX 50® Index (each an “Underlying”). |
|
● |
Contingent coupon rate of 6.80% per
annum (1.70% per quarter) payable quarterly
if the closing
level of each Underlying on the applicable
Observation Date is greater than or equal to 65%
of its Starting
Value. |
|
● |
Beginning on March 4, 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 closing level
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 are expected to
price on December 1, 2020, expected to issue on
December 4, 2020 and expected to mature
on March 4, 2022. |
|
● |
The Notes will not be listed
on any securities exchange. |
The initial estimated value of the Notes as of the pricing date
is expected to be between $960.00 and $990.00 per $1,000.00 in
principal amount of Notes, which is less than the public offering
price listed below. The actual value of your Notes at any time
will reflect many factors and cannot be predicted with accuracy.
See “Risk Factors” beginning on page PS-8 of this pricing
supplement and “Structuring the Notes” on page PS-22 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-26) 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 |
$10.00 |
$990.00 |
Total |
|
|
|
|
(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 $990.00 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 Dow Jones Industrial Average®, 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 Dow Jones Industrial Average®,
the Russell 2000® Index and
the EURO STOXX 50® Index (the “Notes”) provide a
quarterly Contingent Coupon Payment of $17.00 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 4, 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 15 months, unless previously called. |
Underlyings: |
The Dow Jones Industrial Average® (the “INDU”)
(Bloomberg symbol: “INDU”), the Russell 2000®
Index (the “RTY”) (Bloomberg symbol: “RTY”) and the EURO STOXX
50® Index (the “SX5E”) (Bloomberg symbol: “SX5E”), each
a price return index. |
Pricing
Date*: |
December 1, 2020 |
Issue
Date*: |
December 4, 2020 |
Valuation
Date*: |
March 1, 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*: |
March 4, 2022 |
Starting
Value: |
With respect to each Underlying, its closing level on the pricing
date. |
Observation
Value: |
With respect to each Underlying, its closing level on the
applicable Observation Date, as determined by the calculation
agent. |
Ending
Value: |
With respect to each Underlying, its closing level on the Valuation
Date, as determined by the calculation agent. |
Coupon
Barrier: |
With respect to each Underlying, 65% of its Starting Value. |
Threshold
Value: |
With respect to each Underlying, 65% of its Starting Value. |
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 $17.00 per
$1,000 in principal amount of Notes (equal to a rate of 1.70% per
quarter or 6.80% per annum) on the applicable Contingent Payment
Date (including the Maturity Date). |
Optional Early
Redemption:
|
On any Call Date, we have the right to redeem all (but not less
than all) of the Notes at the Early Redemption Amount. No further
amounts will be payable following an Optional Early Redemption. We
will give notice to the trustee at least five business days but not
more than 60 calendar days before the applicable Call Date. |
Early Redemption
Amount:
|
For each $1,000 in principal amount of Notes, $1,000. The Early
Redemption Amount will also include the applicable Contingent
Coupon Payment if the Observation Value of each Underlying on the
corresponding Observation Date is greater than or equal to its
Coupon Barrier. |
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-2 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the Dow Jones Industrial Average®, the
Russell 2000® Index and the EURO STOXX 50®
Index
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:

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 4, 2021
and ending on December 6, 2021. |
Calculation
Agent: |
BofA Securities, Inc. (“BofAS”), an affiliate of BofA Finance. |
Selling
Agent: |
BofAS |
CUSIP: |
09709T3A7 |
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 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 levels 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. |
*Subject to change.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-3 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the Dow Jones Industrial Average®, the
Russell 2000® Index and the EURO STOXX 50®
Index
Observation Dates and Contingent Payment Dates
|
Observation
Dates* |
|
Contingent
Payment Dates |
|
|
March 1, 2021 |
|
March 4, 2021 |
|
|
June 1, 2021 |
|
June 4, 2021 |
|
|
September 1, 2021 |
|
September 7, 2021 |
|
|
December 1, 2021 |
|
December 6, 2021 |
|
|
March 1, 2022 (the “Valuation Date”) |
|
March 4, 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), will reduce 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 pay to purchase the Notes will be greater
than the initial estimated value of the Notes as of the pricing
date.
The initial estimated value range of the Notes as of the date of
this pricing supplement is set forth on the cover page of this
pricing supplement. The final pricing supplement will set forth the
initial estimated value of the Notes as of the pricing date. 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-22.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-4 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the Dow Jones Industrial Average®, 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 Dow Jones Industrial Average®, 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
$17.00, 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 |
|
|
1 |
|
$17.00 |
|
|
2 |
|
$34.00 |
|
|
3 |
|
$51.00 |
|
|
4 |
|
$68.00 |
|
|
5 |
|
$85.00 |
|
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-6 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the Dow Jones Industrial Average®, 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 70 for the Least
Performing Underlying, a hypothetical Threshold Value of 70 for the
Least Performing Underlying, the Contingent Coupon Payment of
$17.00 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 levels of the Underlyings, see “The Underlyings”
section below. Each Underlying is a price return index and as such
its Ending Value will not include any income generated by dividends
paid on the stocks included in that Underlying, which you would
otherwise be entitled to receive if you invested in those stocks
directly. In addition, all payments on the Notes are subject to
Issuer and Guarantor credit risk.
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% |
$1,017.00(2) |
1.70% |
150.00 |
50.00% |
$1,017.00 |
1.70% |
140.00 |
40.00% |
$1,017.00 |
1.70% |
130.00 |
30.00% |
$1,017.00 |
1.70% |
120.00 |
20.00% |
$1,017.00 |
1.70% |
110.00 |
10.00% |
$1,017.00 |
1.70% |
105.00 |
5.00% |
$1,017.00 |
1.70% |
102.00 |
2.00% |
$1,017.00 |
1.70% |
100.00(3) |
0.00% |
$1,017.00 |
1.70% |
90.00 |
-10.00% |
$1,017.00 |
1.70% |
80.00 |
-20.00% |
$1,017.00 |
1.70% |
65.00(4) |
-35.00% |
$1,017.00 |
1.70% |
64.99 |
-35.01% |
$649.90 |
-35.01% |
30.00 |
-70.00% |
$300.00 |
-70.00% |
20.00 |
-80.00% |
$200.00 |
-80.00% |
0.00 |
-100.00% |
$0.00 |
-100.00% |
(1) |
The
“Return on the Notes” is calculated based on the Redemption Amount
and potential final Contingent Coupon Payment, not including any
Contingent Coupon Payments paid prior to maturity. |
(2) |
This
amount represents the sum of the principal amount and the final
Contingent Coupon Payment. |
(3) |
The
hypothetical Starting Value of 100 used in the table above has been
chosen for illustrative purposes only and does not represent a
likely Starting Value for any Underlying. |
(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 Dow Jones Industrial Average®, 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-26 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, at maturity 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, 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 the securities included in one or more of the
Underlyings would allow you to receive the benefit of any
appreciation in their values. 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 levels of
the Underlyings other than on the Observation Dates. The levels
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 levels 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 the Threshold Value, you will
receive less than the principal amount at maturity even if the
level 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 fifteen
months. |
|
● |
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 level of one Underlying may not correlate with
changes in the level of the other Underlying(s). The Notes are not
linked to a basket composed of the Underlyings, where the
depreciation in the level of one Underlying could be offset to some
extent by the appreciation in the level 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 level
of one Underlying would not be offset by any appreciation in the
level 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 of your principal if
the Ending Value of the Least Performing Underlying is below its
Threshold Value. |
|
● |
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, |
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-8 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the Dow Jones Industrial Average®, the
Russell 2000® Index and the EURO STOXX 50®
Index
|
|
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 or the Guarantor’s creditworthiness are expected to
affect the value of the Notes. The Notes are our senior
unsecured debt securities. Any payment on the Notes will be fully
and unconditionally guaranteed by the Guarantor. The Notes are not
guaranteed by any entity other than the Guarantor. As a result,
your receipt of the Early Redemption Amount or the Redemption
Amount at maturity, as applicable, will be dependent upon our
ability and the ability of the Guarantor to repay our respective
obligations under the Notes on the applicable Contingent Payment
Date, Call Date or the Maturity Date, regardless of the Ending
Value of the Least Performing Underlying as compared to its
Starting Value. |
|
|
In addition, our credit ratings and the credit ratings of the
Guarantor are assessments by ratings agencies of our respective
abilities to pay our obligations. Consequently, our or the
Guarantor’s perceived creditworthiness and actual or anticipated
decreases in our or the Guarantor’s credit ratings or increases in
the spread between the yield on our respective securities and the
yield on U.S. Treasury securities (the “credit spread”) prior to
the Maturity Date of your Notes may adversely affect the market
value of the Notes. However, because your return on the Notes
depends upon factors in addition to our ability and the ability of
the Guarantor to pay our respective obligations, such as the values
of the Underlyings, an improvement in our or the Guarantor’s credit
ratings will not reduce the other investment risks related to the
Notes. |
|
● |
We are a finance subsidiary and, as such, have no
independent assets, operations or revenues. We are a finance
subsidiary of BAC, have no operations other than those related to
the issuance, administration and repayment of our debt securities
that are guaranteed by the Guarantor, and are dependent upon the
Guarantor and/or its other subsidiaries to meet our obligations
under the Notes in the ordinary course. Therefore, our ability to
make payments on the Notes may be limited. |
Valuation- and
Market-related Risks
|
● |
The public offering price you pay for the Notes will exceed
their initial estimated value. The range of initial estimated
values of the Notes that is provided on the cover page of this
preliminary pricing supplement, and the initial estimated value as
of the pricing date that will be provided in the final pricing
supplement, are each estimates only, determined as of a particular
point in time by reference to our and our affiliates’ pricing
models. These pricing models consider certain assumptions and
variables, including our credit spreads and those of 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 levels of the Underlyings, changes in the
Guarantor’s internal funding rate, and the inclusion in the public
offering price of the underwriting discount and the hedging related
charges, all as further described in “Structuring the Notes” below.
These factors, together with various credit, market and economic
factors over the term of the Notes, are expected to reduce the
price at which you may be able to sell the Notes in any secondary
market and will affect the value of the Notes in complex and
unpredictable ways. |
|
● |
The initial estimated value does not represent a minimum or
maximum price at which we, BAC, BofAS or any of our other
affiliates would be willing to purchase your Notes in any secondary
market (if any exists) at any time. The value of your Notes at
any time after issuance will vary based on many factors that cannot
be predicted with accuracy, including the performance of the
Underlyings, our and BAC’s creditworthiness and changes in market
conditions. |
|
● |
We cannot assure you that a trading market for your Notes
will ever develop or be maintained. We will not list the Notes
on any securities exchange. We cannot predict how the Notes will
trade in any secondary market or whether that market will be liquid
or illiquid. |
Conflict-related
Risks
|
● |
Trading and hedging activities by us, the Guarantor and any
of our other affiliates, including BofAS, may create conflicts of
interest with you and may affect your return on the Notes and their
market value. We, the Guarantor or one or more of our other
affiliates, including BofAS, may buy or sell 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 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 affect 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, also expect to engage in hedging activities that could
affect the value of |
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-9 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the Dow Jones Industrial Average®, the
Russell 2000® Index and the EURO STOXX 50®
Index
|
|
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. |
|
● |
There may be potential conflicts of interest involving the
calculation agent, which is an affiliate of ours. We have the right to appoint and remove the
calculation agent. One of our affiliates will be the calculation
agent for the Notes and, as such, will make a variety of
determinations relating to the Notes, including the amounts that
will be paid on the Notes. Under some circumstances, these duties
could result in a conflict of interest between its status as our
affiliate and its responsibilities as calculation
agent. |
Underlying-related
Risks
|
● |
The Notes are subject to risks associated with small-size
capitalization companies. The stocks composing 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 relative to
larger companies. Small-size capitalization companies may also be
more susceptible to adverse developments related to their products
or services. |
|
● |
The Notes are subject to risks associated with foreign
securities markets. The SX5E includes 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. |
|
● |
The publisher of an Underlying may adjust that Underlying in
a way that affects its levels, and the publisher has no obligation
to consider your interests. 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 level. Any of these actions could adversely affect the value of
your Notes. |
Tax-related
Risks
|
● |
The U.S. federal income tax consequences of an investment in
the Notes are uncertain, and may be adverse to a holder of the
Notes. No statutory, judicial, or administrative authority
directly addresses the characterization of the Notes or securities
similar to the Notes for U.S. federal income tax purposes. As a
result, significant aspects of the U.S. federal income tax
consequences of an investment in the Notes are not certain. Under
the terms of the Notes, you will have agreed with us to treat the
Notes as contingent income-bearing single financial contracts, as
described below under “U.S. Federal Income Tax Summary—General.” If
the Internal Revenue Service (the “IRS”) were successful in
asserting an alternative characterization for the Notes, the timing
and character of income, gain or loss with respect to the Notes may
differ. No ruling will be requested from the IRS with respect to
the Notes and no assurance can be given that the IRS will agree
with the statements made in the section entitled “U.S. Federal
Income Tax Summary.” You are urged to consult with your own tax
advisor regarding all aspects of the U.S. federal income tax
consequences of investing in the Notes. |
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-10 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the Dow Jones Industrial Average®, 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 S&P Dow Jones
Indices LLC (“SPDJI”), the sponsor of the INDU, FTSE Russell, the
sponsor of the RTY and STOXX Limited (“STOXX”), the sponsor of the
SX5E. We refer to SPDJI, FTSE Russell and STOXX as the “Underlying
Sponsors.” The 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 Underlying Sponsor discontinuing
publication of the applicable Underlying are discussed in
“Description of the Notes — Discontinuance of an Index” 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 index. 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 Dow Jones Industrial
Average®
Unless otherwise stated, all information on the INDU provided in
this pricing supplement is derived from Dow Jones Indexes, the
marketing name and a licensed trademark of CME Group Index
Services, LLC. The INDU is a price-weighted index, which means an
underlying stock’s weight in the INDU is based on its price per
share rather than the total market capitalization of the issuer.
The INDU is designed to provide an indication of the composite
performance of 30 common stocks of corporations representing a
broad cross-section of U.S. industry. The corporations represented
in the INDU tend to be market leaders in their respective
industries and their stocks are typically widely held by
individuals and institutional investors.
The INDU is maintained by an Averages Committee comprised of the
Managing Editor of The Wall Street Journal (“WSJ”), the head of Dow
Jones Indexes research and the head of CME Group Inc. research. The
Averages Committee was created in March 2010, when Dow Jones
Indexes became part of CME Group Index Services, LLC, a joint
venture company owned 90% by CME Group Inc. and 10% by Dow Jones
& Company. Generally, composition changes occur only after
mergers, corporate acquisitions or other dramatic shifts in a
component's core business. When such an event necessitates that one
component be replaced, the entire INDU is reviewed. As a result,
when changes are made they typically involve more than one
component. While there are no rules for component selection, a
stock typically is added only if it has an excellent reputation,
demonstrates sustained growth, is of interest to a large number of
investors and accurately represents the sector(s) covered by the
average.
Changes in the composition of the INDU are made entirely by the
Averages Committee without consultation with the corporations
represented in the INDU, any stock exchange, any official agency or
us. Unlike most other indices, which are reconstituted according to
a fixed review schedule, constituents of the INDU are reviewed on
an as-needed basis. Changes to the common stocks included in the
INDU tend to be made infrequently, and the underlying stocks of the
INDU may be changed at any time for any reason. The companies
currently represented in the INDU are incorporated in the United
States and its territories and their stocks are listed on the New
York Stock Exchange and NASDAQ.
The INDU initially consisted of 12 common stocks and was first
published in the WSJ in 1896. The INDU was increased to include 20
common stocks in 1916 and to include 30 common stocks in 1928. The
number of common stocks in the INDU has remained at 30 since 1928,
and, in an effort to maintain continuity, the constituent
corporations represented in the INDU have been changed on a
relatively infrequent basis. The INDU includes companies from nine
main groups: Basic Materials; Consumer Goods; Consumer Services;
Financials; Healthcare; Industrials; Oil & Gas; Technology; and
Telecommunications.
Computation of the INDU
The level of the INDU is the sum of the primary exchange prices of
each of the 30 component stocks included in the INDU, divided by a
divisor that is designed to provide a meaningful continuity in the
level of the INDU. Because the INDU is price-weighted, stock splits
or changes in the component stocks could result in distortions in
the INDU level. In order to prevent these distortions related to
extrinsic factors, the divisor is periodically changed in
accordance with a mathematical formula that reflects adjusted
proportions within the INDU. The current divisor of the INDU is
published daily in the WSJ and other publications. In addition,
other statistics based on the INDU may be found in a variety of
publicly available sources.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-11 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the Dow Jones Industrial Average®, the
Russell 2000® Index and the EURO STOXX 50®
Index
Historical Performance of the INDU
The following graph sets forth the daily historical performance of
the INDU in the period from January 1, 2008 through November 25,
2020. We obtained this historical data from Bloomberg L.P. We have
not independently verified the accuracy or completeness of the
information obtained from Bloomberg L.P. The horizontal orange line
in the graph represents the INDU’s hypothetical Coupon Barrier and
Threshold Value of 19,417.11 (rounded to two decimal places), which
is 65% of the INDU’s hypothetical Starting Value of 29,872.47,
which was its closing level on November 25, 2020, The actual
Starting Value, Coupon Barrier and Threshold Value will be
determined on the pricing date.

This historical data on the INDU is not necessarily indicative of
the future performance of the INDU or what the value of the Notes
may be. Any historical upward or downward trend in the level of the
INDU during any period set forth above is not an indication that
the level of the INDU 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 INDU.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-12 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the Dow Jones Industrial Average®, the
Russell 2000® Index and the EURO STOXX 50®
Index
License Agreement
S&P® is a registered trademark of Standard &
Poor’s Financial Services LLC (“S&P”) and Dow Jones®
is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow
Jones”). These trademarks have been licensed for use by SPDJI.
“Standard & Poor’s®,” “S&P 500®” and
“S&P®” are trademarks of S&P. These trademarks
have been sublicensed for certain purposes by our affiliate,
Merrill Lynch, Pierce, Fenner & Smith Incorporated. The INDU is
a product of SPDJI and/or its affiliates and has been licensed for
use by Merrill Lynch, Pierce, Fenner & Smith Incorporated.
The Notes are not sponsored, endorsed, sold or promoted by SPDJI,
Dow Jones, S&P or any of their respective affiliates
(collectively, “S&P Dow Jones Indices”). S&P Dow Jones
Indices make no representation or warranty, express or implied, to
the holders of the Notes or any member of the public regarding the
advisability of investing in securities generally or in the Notes
particularly or the ability of the INDU to track general market
performance. S&P Dow Jones Indices’ only relationship to
Merrill Lynch, Pierce, Fenner & Smith Incorporated with respect
to the INDU is the licensing of the INDU and certain trademarks,
service marks and/or trade names of S&P Dow Jones Indices
and/or its third party licensors. The INDU is determined, composed
and calculated by S&P Dow Jones Indices without regard to us,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, or the
Notes. S&P Dow Jones Indices have no obligation to take our
needs, BAC’s needs or the needs of Merrill Lynch, Pierce, Fenner
& Smith Incorporated or holders of the Notes into consideration
in determining, composing or calculating the INDU. S&P Dow
Jones Indices are not responsible for and have not participated in
the determination of the prices and amount of the Notes or the
timing of the issuance or sale of the Notes or in the determination
or calculation of the equation by which the Notes are to be
converted into cash. S&P Dow Jones Indices have no obligation
or liability in connection with the administration, marketing or
trading of the Notes. There is no assurance that investment
products based on the INDU will accurately track index performance
or provide positive investment returns. SPDJI and its subsidiaries
are not investment advisors. Inclusion of a security or futures
contract within an index is not a recommendation by S&P Dow
Jones Indices to buy, sell, or hold such security or futures
contract, nor is it considered to be investment advice.
Notwithstanding the foregoing, CME Group Inc. and its affiliates
may independently issue and/or sponsor financial products unrelated
to the Notes currently being issued by us, but which may be similar
to and competitive with the Notes. In addition, CME Group Inc. and
its affiliates may trade financial products which are linked to the
performance of the INDU. It is possible that this trading activity
will affect the value of the Notes.
S&P DOW JONES INDICES DO NOT GUARANTEE THE ADEQUACY, ACCURACY,
TIMELINESS AND/OR THE COMPLETENESS OF THE INDU OR ANY DATA RELATED
THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR
WRITTEN COMMUNICATIONS (INCLUDING ELECTRONIC COMMUNICATIONS) WITH
RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO
ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS
THEREIN. S&P DOW JONES INDICES MAKE NO EXPRESS OR IMPLIED
WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES, OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO
RESULTS TO BE OBTAINED BY US, BAC, MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED, HOLDERS OF THE NOTES, OR ANY OTHER PERSON
OR ENTITY FROM THE USE OF THE INDU OR WITH RESPECT TO ANY DATA
RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT
WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY
INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES
INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST
TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR
OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS
OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND MERRILL
LYNCH, PIERCE, FENNER & SMITH INCORPORATED, OTHER THAN THE
LICENSORS OF S&P DOW JONES INDICES.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-13 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the Dow Jones Industrial Average®, the
Russell 2000® Index and the EURO STOXX 50®
Index
The Russell 2000®
Index
The RTY was developed by Russell Investments (“Russell”) before
FTSE International Limited and Russell combined in 2015 to create
FTSE Russell, which is wholly owned by London Stock Exchange Group.
Additional information on the RTY is available at the following
website: http://www.ftserussell.com. No information on that website
is deemed to be included or incorporated by reference in this
pricing supplement.
Russell began dissemination of the RTY (Bloomberg L.P. index symbol
“RTY”) on January 1, 1984. FTSE Russell calculates and publishes
the RTY. The RTY was set to 135 as of the close of business on
December 31, 1986. The RTY is designed to track the performance of
the small capitalization segment of the U.S. equity market. As a
subset of the Russell 3000® Index, the RTY consists
of the smallest 2,000 companies included in the Russell
3000® Index.
The Russell 3000® Index measures the
performance of the largest 3,000 U.S. companies, representing
approximately 98% of the investable U.S. equity market. The RTY is
determined, comprised, and calculated by FTSE Russell without
regard to the Notes.
Selection of Stocks Comprising the RTY
All companies eligible for inclusion in the RTY must be classified
as a U.S. company under FTSE Russell’s country-assignment
methodology. If a company is incorporated, has a stated
headquarters location, and trades in the same country (American
Depositary Receipts and American Depositary Shares are not
eligible), then the company is assigned to its country of
incorporation. If any of the three factors are not the same, FTSE
Russell defines three Home Country Indicators (“HCIs”): country of
incorporation, country of headquarters, and country of the most
liquid exchange (as defined by a two-year average daily dollar
trading volume) (“ADDTV”) from all exchanges within a country.
Using the HCIs, FTSE Russell compares the primary location of the
company’s assets with the three HCIs. If the primary location of
its assets matches any of the HCIs, then the company is assigned to
the primary location of its assets. If there is insufficient
information to determine the country in which the company’s assets
are primarily located, FTSE Russell will use the country from which
the company’s revenues are primarily derived for the comparison
with the three HCIs in a similar manner. FTSE Russell uses the
average of two years of assets or revenues data to reduce potential
turnover. If conclusive country details cannot be derived from
assets or revenues data, FTSE Russell will assign the company to
the country of its headquarters, which is defined as the address of
the company’s principal executive offices, unless that country is a
Benefit Driven Incorporation “BDI” country, in which case the
company will be assigned to the country of its most liquid stock
exchange. BDI countries include: Anguilla, Antigua and Barbuda,
Bahamas, Barbados, Belize, Bermuda, Bonaire, British Virgin
Islands, Cayman Islands, Channel Islands, Cook Islands, Curacao,
Faroe Islands, Gibraltar, Guernsey, Isle of Man, Jersey, Liberia,
Marshall Islands, Panama, Saba, Sint Eustatius, Sint Maarten, and
Turks and Caicos Islands. For any companies incorporated or
headquartered in a U.S. territory, including Puerto Rico, Guam, and
U.S. Virgin Islands, a U.S. HCI is assigned.
All securities eligible for inclusion in the RTY must trade on a
major U.S. exchange. Stocks must have a closing price at or above
$1.00 on their primary exchange on the last trading day in May to
be eligible for inclusion during annual reconstitution. However, in
order to reduce unnecessary turnover, if an existing member’s
closing price is less than $1.00 on the last day of May, it will be
considered eligible if the average of the daily closing prices
(from its primary exchange) during the month of May is equal to or
greater than $1.00. Initial public offerings are added each quarter
and must have a closing price at or above $1.00 on the last day of
their eligibility period in order to qualify for index inclusion.
If an existing stock does not trade on the “rank day” (typically
the last trading day in May but a confirmed timetable is announced
each spring) but does have a closing price at or above $1.00 on
another eligible U.S. exchange, that stock will be eligible for
inclusion.
An important criterion used to determine the list of securities
eligible for the RTY is total market capitalization, which is
defined as the market price as of the last trading day in May for
those securities being considered at annual reconstitution times
the total number of shares outstanding. Where applicable, common
stock, non-restricted exchangeable shares and partnership
units/membership interests are used to determine market
capitalization. Any other form of shares such as preferred stock,
convertible preferred stock, redeemable shares, participating
preferred stock, warrants and rights, installment receipts or trust
receipts, are excluded from the calculation. If multiple share
classes of common stock exist, they are combined. In cases where
the common stock share classes act independently of each other
(e.g., tracking stocks), each class is considered for inclusion
separately. If multiple share classes exist, the pricing vehicle
will be designated as the share class with the highest two-year
trading volume as of the rank day in May.
Companies with a total market capitalization of less than $30
million are not eligible for the RTY. Similarly, companies with
only 5% or less of their shares available in the marketplace are
not eligible for the RTY. Royalty trusts, limited liability
companies, closed-end investment companies (companies that are
required to report Acquired Fund Fees and Expenses, as defined by
the SEC, including business development companies), blank check
companies, special purpose acquisition companies, and limited
partnerships are also ineligible for inclusion. Bulletin board,
pink sheets, and over-the-counter (“OTC”) traded securities are not
eligible for inclusion. Exchange traded funds and mutual funds are
also excluded.
Annual reconstitution is a process by which the RTY is completely
rebuilt. Based on closing levels of the company’s common stock on
its primary exchange on the rank day of May of each year, FTSE
Russell reconstitutes the composition of the RTY using the then
existing market capitalizations of eligible companies.
Reconstitution of the RTY occurs on the last Friday in June or,
when the last Friday in June is the 29th or 30th, reconstitution
occurs on the prior Friday. In addition, FTSE Russell adds initial
public offerings to the RTY on a quarterly basis based on total
market capitalization ranking within the market-adjusted
capitalization breaks established during the most recent
reconstitution. After membership is determined, a security’s shares
are adjusted to include only those shares available to the public.
This is often referred to as “free float.” The purpose of the
adjustment is to exclude from market calculations the
capitalization that is not available for purchase and is not part
of the investable opportunity set.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-14 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the Dow Jones Industrial Average®, 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 November 25,
2020. We obtained this historical data from Bloomberg L.P. We have
not independently verified the accuracy or completeness of the
information obtained from Bloomberg L.P. The horizontal orange line
in the graph represents the RTY’s hypothetical Coupon Barrier and
Threshold Value of 1,199.266 (rounded to three decimal places),
which is 65% of the RTY’s hypothetical Starting Value of 1,845.024,
which was its closing level on November 25, 2020. The actual
Starting Value, Coupon Barrier and Threshold Value will be
determined on the pricing date.

This historical data on the RTY is not necessarily indicative of
the future performance of the RTY or what the value of the Notes
may be. Any historical upward or downward trend in the level of the
RTY during any period set forth above is not an indication that the
level of the RTY is more or less likely to increase or decrease at
any time over the term of the Notes.
Before investing in the Notes, you should consult publicly
available sources for the levels of the RTY.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-15 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the Dow Jones Industrial Average®, the
Russell 2000® Index and the EURO STOXX 50®
Index
License Agreement
“Russell 2000®”
and “Russell 3000®” are trademarks of FTSE
Russell and have been licensed for use by our affiliate, Merrill
Lynch, Pierce, Fenner & Smith Incorporated. The Notes are not
sponsored, endorsed, sold, or promoted by FTSE Russell, and FTSE
Russell makes no representation regarding the advisability of
investing in the Notes.
FTSE Russell and Merrill Lynch, Pierce, Fenner & Smith
Incorporated have entered into a non-exclusive license agreement
providing for the license to Merrill Lynch, Pierce, Fenner &
Smith Incorporated and its affiliates, including us, in exchange
for a fee, of the right to use indices owned and published by FTSE
Russell in connection with some securities, including the Notes.
The license agreement provides that the following language must be
stated in this pricing supplement:
The Notes are not sponsored, endorsed, sold, or promoted by FTSE
Russell. FTSE Russell makes no representation or warranty, express
or implied, to the holders of the Notes or any member of the public
regarding the advisability of investing in securities generally or
in the Notes particularly or the ability of the RTY to track
general stock market performance or a segment of the same. FTSE
Russell’s publication of the RTY in no way suggests or implies an
opinion by FTSE Russell as to the advisability of investment in any
or all of the securities upon which the RTY is based. FTSE
Russell’s only relationship to Merrill Lynch, Pierce, Fenner &
Smith Incorporated and to us is the licensing of certain trademarks
and trade names of FTSE Russell and of the RTY, which is
determined, composed, and calculated by FTSE Russell without regard
to Merrill Lynch, Pierce, Fenner & Smith Incorporated, us, or
the Notes. FTSE Russell is not responsible for and has not reviewed
the Notes nor any associated literature or publications and FTSE
Russell makes no representation or warranty express or implied as
to their accuracy or completeness, or otherwise. FTSE Russell
reserves the right, at any time and without notice, to alter,
amend, terminate, or in any way change the RTY. FTSE Russell has no
obligation or liability in connection with the administration,
marketing, or trading of the Notes.
FTSE RUSSELL DOES NOT GUARANTEE THE ACCURACY AND/OR THE
COMPLETENESS OF THE RTY OR ANY DATA INCLUDED THEREIN AND FTSE
RUSSELL SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR
INTERRUPTIONS THEREIN. FTSE RUSSELL MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY MERRILL LYNCH, PIERCE,
FENNER & SMITH INCORPORATED, US, HOLDERS OF THE NOTES, OR ANY
OTHER PERSON OR ENTITY FROM THE USE OF THE RTY OR ANY DATA INCLUDED
THEREIN. FTSE RUSSELL MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND
EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE RTY OR ANY DATA
INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO
EVENT SHALL FTSE RUSSELL HAVE ANY LIABILITY FOR ANY SPECIAL,
PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST
PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-16 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the Dow Jones Industrial Average®, the
Russell 2000® Index and the EURO STOXX 50®
Index
The EURO STOXX 50®
Index
The SX5E was created by STOXX, which is owned by Deutsche Börse AG.
Publication of the SX5E began in February 1998, based on an initial
index level of 1,000 at December 31, 1991.
Index Composition and Maintenance
The SX5E is composed of 50 stocks from 11 Eurozone countries
(Austria, Belgium, Finland, France, Germany, Ireland, Italy,
Luxembourg, the Netherlands, Portugal and Spain) of the STOXX
Europe 600 Supersector indices. The STOXX 600 Supersector indices
contain the 600 largest stocks traded on the major exchanges of 18
European countries and are organized into the following 19
Supersectors: automobiles & parts; banks; basic resources;
chemicals; construction & materials; financial services; food
& beverage; health care; industrial goods & services;
insurance; media; oil & gas; personal & household goods;
real estate; retail; technology; telecommunications; travel &
leisure and utilities.
For each of the 19 EURO STOXX regional supersector indices, the
stocks are ranked in terms of free-float market capitalization. The
largest stocks are added to the selection list until the coverage
is close to, but still less than, 60% of the free-float market
capitalization of the corresponding supersector index. If the next
highest-ranked stock brings the coverage closer to 60% in absolute
terms, then it is also added to the selection list. All current
stocks in the SX5E are then added to the selection list. All of the
stocks on the selection list are then ranked in terms of free-float
market capitalization to produce the final index selection list.
The largest 40 stocks on the selection list are selected; the
remaining 10 stocks are selected from the largest remaining current
stocks ranked between 41 and 60; if the number of stocks selected
is still below 50, then the largest remaining stocks are selected
until there are 50 stocks. In exceptional cases, STOXX’s management
board can add stocks to and remove them from the selection
list.
The index components are subject to a capped maximum index weight
of 10%, which is applied on a quarterly basis.
The composition of the SX5E is reviewed annually, based on the
closing stock data on the last trading day in August. Changes in
the composition of the SX5E are made to ensure that the SX5E
includes the 50 market sector leaders from within the EURO
STOXX® Index.
The free float factors for each component stock used to calculate
the SX5E, as described below, are reviewed, calculated, and
implemented on a quarterly basis and are fixed until the next
quarterly review.
The SX5E is subject to a “fast exit rule.” The index components are
monitored for any changes based on the monthly selection list
ranking. A stock is deleted from the SX5E if: (a) it ranks 75 or
below on the monthly selection list and (b) it has been ranked 75
or below for a consecutive period of two months in the monthly
selection list. The highest-ranked stock that is not an index
component will replace it. Changes will be implemented on the close
of the fifth trading day of the month, and are effective the next
trading day.
The SX5E is also subject to a “fast entry rule.” All stocks on the
latest selection lists and initial public offering (IPO) stocks are
reviewed for a fast-track addition on a quarterly basis. A stock is
added, if (a) it qualifies for the latest STOXX blue-chip selection
list generated end of February, May, August or November and (b) it
ranks within the “lower buffer” on this selection list.
The SX5E is also reviewed on an ongoing monthly basis. Corporate
actions (including initial public offerings, mergers and takeovers,
spin-offs, delistings, and bankruptcy) that affect the index
composition are announced immediately, implemented two trading days
later and become effective on the next trading day after
implementation.
Index Calculation
The SX5E is calculated with the “Laspeyres formula,” which measures
the aggregate price changes in the component stocks against a fixed
base quantity weight. The formula for calculating the index value
can be expressed as follows:
EURO STOXX 50® Index = Free float market
capitalization of the EURO STOXX 50® Index
Divisor
The “free float market capitalization of the EURO STOXX
50® Index” is equal to the sum of the product of the
price, the number of shares and the free float factor and the
weighting cap factor for each component stock as of the time the
SX5E is being calculated.
The SX5E is also subject to a divisor, which is adjusted to
maintain the continuity of the index values across changes due to
corporate actions, such as the deletion and addition of stocks, the
substitution of stocks, stock dividends, and stock splits.
Neither we nor any of our affiliates, including BofAS, accepts any
responsibility for the calculation, maintenance, or publication of,
or for any error, omission, or disruption in, the SX5E or any
successor to the SX5E. STOXX does not guarantee the accuracy or the
completeness of the SX5E or any data included in the SX5E. STOXX
assumes no liability for any errors, omissions, or disruption in
the calculation and dissemination of the SX5E. STOXX disclaims all
responsibility for any errors or omissions in the calculation and
dissemination of the SX5E or the manner in which the SX5E is
applied in determining the amount payable on the Notes at
maturity.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-17 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the Dow Jones Industrial Average®, 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 November 25,
2020. We obtained this historical data from Bloomberg L.P. We have
not independently verified the accuracy or completeness of the
information obtained from Bloomberg L.P. The horizontal orange line
in the graph represents the SX5E’s hypothetical Coupon Barrier and
Threshold Value of 2,282.74 (rounded to two decimal places), which
is 65% of the SX5E’s hypothetical Starting Value of 3,511.90, which
was its closing level on November 25, 2020. The actual Starting
Value, Coupon Barrier and Threshold Value will be determined on the
pricing date.

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.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-18 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the Dow Jones Industrial Average®, the
Russell 2000® Index and the EURO STOXX 50®
Index
License Agreement
One of our affiliates has entered into a non-exclusive license
agreement with STOXX providing for the license to it and certain of
its affiliated companies, including us, of the right to use indices
owned and published by STOXX (including the SX5E) in connection
with certain securities, including the Notes.
The license agreement requires that the following language be
stated in this pricing supplement:
“STOXX Limited, Deutsche Börse Group and their licensors, research
partners or data providers have no relationship to us other than
the licensing of the SX5E and the related trademarks for use in
connection with the Notes.
STOXX, Deutsche Börse Group and their licensors, research
partners or data providers do not:
|
● |
sponsor, endorse, sell or promote
the Notes. |
|
● |
recommend that any person invest in
the Notes or any other securities. |
|
● |
have any responsibility or
liability for or make any decisions about the timing, amount or
pricing of the Notes. |
|
● |
have any responsibility or
liability for the administration, management or marketing of the
Notes. |
|
● |
consider the needs of the Notes or
the owners of the Notes in determining, composing or calculating
the SX5E or have any obligation to do so. |
STOXX, Deutsche Börse Group and their licensors, research
partners or data providers give no warranty, and exclude any
liability (whether in negligence or otherwise), in connection with
the Notes or their performance.
STOXX does not assume any contractual relationship with the
purchasers of the Notes or any other third parties.
Specifically,
|
● |
STOXX, Deutsche Börse Group and
their licensors, research partners or data providers do not give
any warranty, express or implied, and exclude any liability
about: |
|
● |
The results to be obtained by the
Notes, the owner of the Notes or any other person in connection
with the use of the SX5E and the data included in the SX5E; |
|
● |
The accuracy, timeliness, and
completeness of the SX5E and its data; |
|
● |
The merchantability and the fitness
for a particular purpose or use of the SX5E and its data; |
|
● |
The performance of the Notes
generally. |
|
● |
STOXX, Deutsche Börse Group and
their licensors, research partners or data providers give no
warranty and exclude any liability, for any errors, omissions or
interruptions in the SX5E or its data; |
|
● |
Under no circumstances will STOXX,
Deutsche Börse Group or their licensors, research partners or data
providers be liable (whether in negligence or otherwise) for any
lost profits or indirect, punitive, special or consequential
damages or losses, arising as a result of such errors, omissions or
interruptions in the SX5E or its data or generally in relation to
the Notes, even in circumstances where STOXX, Deutsche Börse Group
or their licensors, research partners or data providers are aware
that such loss or damage may occur. |
The licensing agreement discussed above is solely for our benefit
and that of STOXX, and not for the benefit of the owners of the
Notes or any other third parties.”
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-19 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the Dow Jones Industrial Average®, 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 expect to 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, if the initial
settlement of the Notes occurs more than two business days from the
pricing date, 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 $990.00 per $1,000 in principal amount of
Notes.
BofAS and any of our other broker-dealer affiliates may use this
pricing supplement and the accompanying product supplement,
prospectus supplement and prospectus for offers and sales in
secondary market transactions and market-making transactions in the
Notes. However, they are not obligated to engage in such secondary
market transactions and/or market-making transactions. The selling
agent may act as principal or agent in these transactions, and any
such sales will be made at prices related to prevailing market
conditions at the time of the sale.
At BofAS’s discretion, for a short, undetermined initial period
after the issuance of the Notes, BofAS may offer to buy the Notes
in the secondary market at a price that may exceed the initial
estimated value of the Notes. Any price offered by BofAS for the
Notes will be based on then-prevailing market conditions and other
considerations, including the performance of the Underlyings and
the remaining term of the Notes. However, none of us, the
Guarantor, BofAS or any of our other affiliates is obligated to
purchase your Notes at any price or at any time, and we cannot
assure you that any party will purchase your Notes at a price that
equals or exceeds the initial estimated value of the Notes.
Any price that BofAS may pay to repurchase the Notes will depend
upon then prevailing market conditions, the creditworthiness of us
and the Guarantor, and transaction costs. At certain times, this
price may be higher than or lower than the initial estimated value
of the Notes.
European Economic Area and United Kingdom
None of this pricing supplement, the accompanying product
supplement, the accompanying prospectus or the accompanying
prospectus supplement is a prospectus for the purposes of the
Prospectus Regulation (as defined below). This pricing supplement,
the accompanying product supplement, the accompanying prospectus
and the accompanying prospectus supplement have been prepared on
the basis that any offer of Notes in any Member State of the
European Economic Area (the “EEA”) or in the United Kingdom (each,
a “Relevant State”) will only be made to a legal entity which is a
qualified investor under the Prospectus Regulation (“Qualified
Investors”). Accordingly any person making or intending to make an
offer in that Relevant State of Notes which are the subject of the
offering contemplated in this pricing supplement, the accompanying
product supplement, the accompanying prospectus and the
accompanying prospectus supplement may only do so with respect to
Qualified Investors. Neither BofA Finance nor BAC has authorized,
nor does it authorize, the making of any offer of Notes other than
to Qualified Investors. The expression “Prospectus Regulation”
means Regulation (EU) 2017/1129.
PROHIBITION OF SALES TO EEA AND UNITED KINGDOM RETAIL
INVESTORS – The Notes are not intended to be offered, sold or
otherwise made available to and should not be offered, sold or
otherwise made available to any retail investor in the EEA or in
the United Kingdom. For these purposes: (a) a retail investor means
a person who is one (or more) of: (i) a retail client as defined in
point (11) of Article 4(1) of Directive 2014/65/EU, as amended
(“MiFID II”); or (ii) a customer within the meaning of Directive
(EU) 2016/97 (the Insurance Distribution Directive) where that
customer would not qualify as a professional client as defined in
point (10) of Article 4(1) of MiFID II; or (iii) not a qualified
investor as defined in the Prospectus Regulation; and (b) the
expression “offer” includes the communication in any form and by
any means of sufficient information on the terms of the offer and
the Notes to be offered so as to enable an investor to decide to
purchase or subscribe for the Notes. Consequently no key
information document required by Regulation (EU) No 1286/2014, as
amended (the “PRIIPs Regulation”) for offering or selling the Notes
or otherwise making them available to retail investors in the EEA
or in the United Kingdom has been prepared and therefore offering
or selling the Notes or otherwise making them available to any
retail investor in the EEA or in the United Kingdom may be unlawful
under the PRIIPs Regulation.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-20 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the Dow Jones Industrial Average®, the
Russell 2000® Index and the EURO STOXX 50®
Index
United Kingdom
The communication of this pricing supplement, the accompanying
product supplement, the accompanying prospectus supplement, the
accompanying prospectus and any other document or materials
relating to the issue of the Notes offered hereby is not being
made, and such documents and/or materials have not been approved,
by an authorized person for the purposes of section 21 of the
United Kingdom’s Financial Services and Markets Act 2000, as
amended (the “FSMA”). Accordingly, such documents and/or materials
are not being distributed to, and must not be passed on to, the
general public in the United Kingdom. The communication of such
documents and/or materials as a financial promotion is only being
made to those persons in the United Kingdom who have professional
experience in matters relating to investments and who fall within
the definition of investment professionals (as defined in Article
19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005, as amended (the “Financial Promotion
Order”)), or who fall within Article 49(2)(a) to (d) of the
Financial Promotion Order, or who are any other persons to whom it
may otherwise lawfully be made under the Financial Promotion Order
(all such persons together being referred to as “relevant
persons”). In the United Kingdom, the Notes offered hereby are only
available to, and any investment or investment activity to which
this pricing supplement, the accompanying product supplement, the
accompanying prospectus supplement and the accompanying prospectus
relates will be engaged in only with, relevant persons. Any person
in the United Kingdom that is not a relevant person should not act
or rely on this pricing supplement, the accompanying product
supplement, the accompanying prospectus supplement or the
accompanying prospectus or any of their contents.
Any invitation or inducement to engage in investment activity
(within the meaning of Section 21 of the FSMA) in connection with
the issue or sale of the Notes may only be communicated or caused
to be communicated in circumstances in which Section 21(1) of the
FSMA does not apply to BofA Finance, as Issuer, or BAC, as
Guarantor.
All applicable provisions of the FSMA must be complied with in
respect to anything done by any person in relation to the Notes in,
from or otherwise involving the United Kingdom
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-21 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the Dow Jones Industrial Average®, 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, typically results 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.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-22 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the Dow Jones Industrial Average®, 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 any
component stocks included in an Underlying 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 one or more stocks included in an Underlying
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 issuers of
the component stocks included in the Underlyings and consult your
tax advisor regarding the possible consequences to you, if any, if
any issuer of a component stock included in an Underlying is or
becomes a PFIC or is or becomes a United States real property
holding corporation.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-23 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the Dow Jones Industrial Average®, the
Russell 2000® Index and the EURO STOXX 50®
Index
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.
Upon receipt of a cash payment at maturity or upon a sale,
exchange, or redemption of the Notes prior to maturity, a U.S.
Holder generally will recognize capital gain or loss equal to the
difference between the amount realized (other than amounts
representing any Contingent Coupon Payment, which would be taxed as
described above) and the U.S. Holder’s tax basis in the Notes. A
U.S. Holder’s tax basis in the Notes will equal the amount paid by
that holder to acquire them. This capital gain or loss generally
will be long-term capital gain or loss if the U.S. Holder held the
Notes for more than one year. The deductibility of capital losses
is subject to limitations.
Alternative Tax Treatments. Due to the absence of
authorities that directly address the proper tax treatment of the
Notes, prospective investors are urged to consult their tax
advisors regarding all possible alternative tax treatments of an
investment in the Notes. In particular, the IRS could seek to
subject the Notes to the Treasury regulations governing contingent
payment debt instruments. If the IRS were successful in that
regard, the timing and character of income on the Notes would be
affected significantly. Among other things, a U.S. Holder would be
required to accrue original issue discount every year at a
“comparable yield” determined at the time of issuance. In addition,
any gain realized by a U.S. Holder at maturity or upon a sale,
exchange, or redemption of the Notes generally would be treated as
ordinary income, and any loss realized at maturity or upon a sale,
exchange, or redemption of the Notes generally would be treated as
ordinary loss to the extent of the U.S. Holder’s prior accruals of
original issue discount, and as capital loss thereafter.
In addition, it is possible that the Notes could be treated as a
unit consisting of a deposit and a put option written by the Note
holder, in which case the timing and character of income on the
Notes would be affected significantly.
The IRS released Notice 2008-2 (the “Notice”), which sought
comments from the public on the taxation of financial instruments
currently taxed as “prepaid forward contracts.” This Notice
addresses instruments such as the Notes. According to the Notice,
the IRS and Treasury are considering whether a holder of an
instrument such as the Notes should be required to accrue ordinary
income on a current basis, regardless of whether any payments are
made prior to maturity. It is not possible to determine what
guidance the IRS and Treasury will ultimately issue, if any. Any
such future guidance may affect the amount, timing and character of
income, gain, or loss in respect of the Notes, possibly with
retroactive effect.
The IRS and Treasury are also considering additional issues,
including whether additional gain or loss from such instruments
should be treated as ordinary or capital, whether foreign holders
of such instruments should be subject to withholding tax on any
deemed income accruals, whether Section 1260 of the Code,
concerning certain “constructive ownership transactions,” generally
applies or should generally apply to such instruments, and whether
any of these determinations depend on the nature of the underlying
asset.
In addition, proposed Treasury regulations require the accrual of
income on a current basis for contingent payments made under
certain notional principal contracts. The preamble to the
regulations states that the “wait and see” method of accounting
does not properly reflect the economic accrual of income on those
contracts, and requires current accrual of income for some
contracts already in existence. While the proposed regulations do
not apply to prepaid forward contracts, the preamble to the
proposed regulations expresses the view that similar timing issues
exist in the case of prepaid forward contracts. If the IRS or
Treasury publishes future guidance requiring current economic
accrual for contingent payments on prepaid forward contracts, it is
possible that you could be required to accrue income over the term
of the Notes.
Because of the absence of authority regarding the appropriate tax
characterization of the Notes, it is also possible that the IRS
could seek to characterize the Notes in a manner that results in
tax consequences that are different from those described above. For
example, the IRS could possibly assert that any gain or loss that a
holder may recognize at maturity or upon the sale, exchange, or
redemption of the Notes should be treated as ordinary gain or
loss.
Because each Underlying is an index that periodically rebalances,
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
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-24 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the Dow Jones Industrial Average®, the
Russell 2000® Index and the EURO STOXX 50®
Index
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 withholding tax in addition to the
withholding tax described above, tax will be withheld at the
applicable statutory rate. Prospective Non-U.S. Holders should
consult their own tax advisors regarding the tax consequences of
such alternative characterizations.
U.S. Federal Estate Tax. Under current law, while the matter
is not entirely clear, individual Non-U.S. Holders, and entities
whose property is potentially includible in those individuals’
gross estates for U.S. federal estate tax purposes (for example, a
trust funded by such an individual and with respect to which the
individual has retained certain interests or powers), should note
that, absent an applicable treaty benefit, a Note is likely to be
treated as U.S. situs property, subject to U.S. federal estate tax.
These individuals and entities should consult their own tax
advisors regarding the U.S. federal estate tax consequences of
investing in a Note.
Backup Withholding and Information Reporting
Please see the discussion under “U.S. Federal Income Tax
Considerations — Taxation of Debt Securities — Backup Withholding
and Information Reporting” in the accompanying prospectus for a
description of the applicability of the backup withholding and
information reporting rules to payments made on the Notes.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-25 |
Contingent Income Issuer Callable Yield Notes Linked to the Least
Performing of the Dow Jones Industrial Average®, 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:
These documents (together, the “Note Prospectus”) have been filed
as part of a registration statement with the SEC, which may,
without cost, be accessed on the SEC website at www.sec.gov or
obtained from BofAS by calling 1-800-294-1322. Before you invest,
you should read the Note Prospectus, including this pricing
supplement, for information about us, BAC and this offering. Any
prior or contemporaneous oral statements and any other written
materials you may have received are superseded by the Note
Prospectus. Certain terms used but not defined in this pricing
supplement have the meanings set forth in the accompanying product
supplement or prospectus supplement. Unless otherwise indicated or
unless the context requires otherwise, all references in this
document to “we,” “us,” “our,” or similar references are to BofA
Finance, and not to BAC.
The Notes are our senior debt securities. Any payments on the Notes
are fully and unconditionally guaranteed by BAC. The Notes and the
related guarantee are not insured by the Federal Deposit Insurance
Corporation or secured by collateral. The Notes will rank equally
in right of payment with all of our other unsecured and
unsubordinated obligations, and the related guarantee will rank
equally in right of payment with all of BAC’s other unsecured and
unsubordinated obligations, in each case, except obligations that
are subject to any priorities or preferences by law. Any payments
due on the Notes, including any repayment of the principal amount,
will be subject to the credit risk of BofA Finance, as Issuer, and
BAC, as Guarantor.
|
CONTINGENT INCOME ISSUER CALLABLE YIELD NOTES | PS-26 |
Bank of America (NYSE:BAC)
Historical Stock Chart
From Dec 2020 to Jan 2021
Bank of America (NYSE:BAC)
Historical Stock Chart
From Jan 2020 to Jan 2021