Subject to Completion | Filed Pursuant to Rule 424(b)(2) | |||
Preliminary Term Sheet dated | Registration Statement No. 333-213265 | |||
August 8, 2019 | (To Prospectus dated November 4, 2016, | |||
Prospectus Supplement dated November 4, 2016 and | ||||
Product Supplement EQUITY LIRN-1 | ||||
dated March 8, 2019 | ||||
Units | Pricing Date* | August , 2019 | ||
$10 principal amount per unit | Settlement Date* | September , 2019 | ||
CUSIP No. | Maturity Date* | August , 2021 |
*Subject to change based on the actual date the notes are priced for initial sale to the public (the "pricing date")
BofA Finance LLC
Leveraged Index Return Notes® Linked to the EURO STOXX 50® Index
Fully and Unconditionally Guaranteed by Bank of America Corporation
- Maturity of approximately two years
- [125.00% to 145.00%] leveraged upside exposure to increases in the Index
- 1-to-1downside exposure to decreases in the Index beyond a 10% decline, with up to 90% of your principal at risk
- All payments occur at maturity and are subject to the credit risk of BofA Finance LLC, as issuer of the notes, and the credit risk of Bank of America Corporation, as guarantor of the notes
- No periodic interest payments
- In addition to the underwriting discount set forth below, the notes include a hedging-related charge of $0.075 per unit. See "Structuring the Notes"
- Limited secondary market liquidity, with no exchange listing
The notes are being issued by BofA Finance LLC ("BofA Finance") and are fully and unconditionally guaranteed by Bank of America Corporation ("BAC"). There are important differences between the notes and a conventional debt security, including different investment risks and certain additional costs. See "Risk Factors" beginning on page TS-6 of this term sheet and "Risk Factors" beginning on page PS-7 of the accompanying product supplement EQUITY LIRN-1, page S-4 of the accompanying Series A MTN prospectus supplement and page 7 of the accompanying prospectus.
The initial estimated value of the notes as of the pricing date is expected to be between $9.36 and $9.82 per unit, which is less than the public offering price listed below. See "Summary" on the following page, "Risk Factors" beginning on page TS-6of this term sheet and "Structuring the Notes" on page TS-11of this term sheet for additional information. The actual value of your notes at any time will reflect many factors and cannot be predicted with accuracy.
_________________________
None of the Securities and Exchange Commission (the "SEC"), any state securities commission, or any other regulatory body has approved or disapproved of these securities or determined if this Note Prospectus (as defined below) is truthful or complete. Any representation to the contrary is a criminal offense.
_________________________ | |||
Per Unit | Total | ||
Public offering price | (1) | $10.00 | $ |
$0.20 | $ | ||
Underwriting discount(1) | |||
Proceeds, before expenses, to BofA Finance | $9.80 | $ |
- For any purchase of 500,000 units or more in a single transaction by an individual investor or in combined transactions with the investor's household in this offering, the public offering price and the underwriting discount will be $9.95 per unit and $0.15 per unit, respectively. See "Supplement to the Plan of Distribution; Conflicts of Interest" below.
The notes and the related guarantee:
Are Not FDIC Insured | Are Not Bank Guaranteed | May Lose Value |
BofA Merrill Lynch
August , 2019
Leveraged Index Return Notes®
Linked to the EURO STOXX 50® Index , due August , 2021
Summary
The Leveraged Index Return Notes® Linked to the EURO STOXX 50® Index, due August , 2021 (the "notes") are our senior unsecured debt securities. Payments on the notes are fully and unconditionally guaranteed by BAC. The notes and the related guarantee are not insured by the Federal Deposit Insurance Corporation or secured by collateral. The notes will rank equally with all of BofA Finance's other unsecured and unsubordinated debt, and the related guarantee will rank equally with all of BAC's other unsecured and unsubordinated obligations. Any payments due on the notes, including any repayment of principal, will be subject to the credit risk of BofA Finance, as issuer, and BAC, as guarantor. The notes provide you a leveraged return if
the Ending Value of the Market Measure, which is the EURO STOXX 50® Index (the "Index"), is greater than its Starting Value. If the Ending Value is less than the Threshold Value, you will lose a portion, which could be significant, of the principal amount of your notes. Any payments on the notes will be calculated based on the $10 principal amount per unit and will depend on the performance of the Index, subject to our and BAC's credit risk. See "Terms of the
Notes" below.
The economic terms of the notes (including the Participation Rate) are based on BAC's internal funding rate, which is the rate it would pay to borrow funds through the issuance of market-linked notes and the economic terms of certain related hedging arrangements. BAC's internal funding rate is typically lower than the rate it would pay when it issues conventional fixed or floating rate debt securities. This difference in funding rate, as well as the underwriting discount and the hedging related charge described below, will reduce the economic terms of the notes to you and the initial estimated value of the notes on the pricing date. Due to these factors, the public offering price you pay to purchase the notes will be greater than the initial estimated value of the notes.
On the cover page of this term sheet, we have provided the initial estimated value range for the notes. This initial estimated value range was determined based on our, BAC's and our other affiliates' pricing models, which take into consideration BAC's internal funding rate and the market prices for the hedging arrangements related to the notes. The initial estimated value of the notes calculated on the pricing date will be set forth in the final term sheet made available to investors in the notes. For more information about the initial estimated value and the structuring of the notes, see "Structuring the Notes" on page TS-11.
Terms of the Notes | Redemption Amount Determination | |
Issuer: | BofA Finance LLC ("BofA Finance") | On the maturity date, you will receive a cash payment per unit determined as follows: |
Guarantor: | Bank of America Corporation ("BAC") | |
Principal Amount: | $10.00 per unit | |
Term: | Approximately two years | |
Market Measure: | The EURO STOXX 50® Index (Bloomberg | |
symbol: "SX5E"), a price return index | ||
Starting Value: | The closing level of the Market Measure on the | |
pricing date | ||
Ending Value: | The average of the closing levels of the Market | |
Measure on each calculation day occurring during the | ||
Maturity Valuation Period. The scheduled calculation | ||
days are subject to postponement in the event of | ||
Market Disruption Events, as described beginning on | ||
page PS-26 of product supplement EQUITY LIRN-1. | ||
Threshold Value: | 90% of the Starting Value, rounded to two decimal | |
places. | ||
Participation Rate: | [125.00% to 145.00%]. The actual Participation Rate | |
will be determined on the pricing date. | ||
Maturity Valuation | Five scheduled calculation days shortly before the | |
Period: | maturity date. | |
Fees and Charges: | The underwriting discount of $0.20 per unit listed on | |
the cover page and the hedging related charge of | ||
$0.075 per unit described in "Structuring the Notes" | ||
on page TS-11. | ||
Calculation Agent: | BofA Securities, Inc. ("BofAS"), an affiliate of BofA | |
Finance. | ||
Leveraged Index Return Notes | ® | TS-2 |
Leveraged Index Return Notes®
Linked to the EURO STOXX 50® Index , due August , 2021
Hypothetical Payout Profile and Examples of Payments at Maturity
The below graph is based on hypothetical numbers and values.
Leveraged Index Return Notes®
This graph reflects the returns on the notes, based on a Participation Rate of 135.00% (the midpoint of the Participation Rate range of [125.00% to 145.00%]) and a Threshold Value of 90% of the Starting Value. The green line reflects the returns on the notes, while the dotted gray line reflects the returns of a direct investment in the stocks included in the Index, excluding dividends.
This graph has been prepared for purposes of illustration only.
The following table and examples are for purposes of illustration only. They are based on hypothetical values and show hypothetical returns on the notes. They illustrate the calculation of the Redemption Amount and total rate of return based on a hypothetical Starting Value of 100, a Threshold Value of 90, a Participation Rate of 135.00% and a range of hypothetical Ending Values. The actual amount you receive and the resulting total rate of return will depend on the actual Starting Value, Threshold Value, Participation Rate, Ending Value, and whether you hold the notes to maturity. The following examples do not take into account any tax consequences from investing in the notes.
For recent actual levels of the Market Measure, see "The Index" section below. The Index is a price return index and as such the Ending Value will not include any income generated by dividends paid on the stocks included in the Index, which you would otherwise be entitled to receive if you invested in those stocks directly. In addition, all payments on the notes are subject to issuer and guarantor credit risk.
Percentage Change from the Starting | Redemption Amount per Unit(1) | ||
Ending Value | Value to the Ending Value | Total Rate of Return on the Notes | |
0.00 | -100.00% | $1.000 | -90.00% |
50.00 | -50.00% | $6.000 | -40.00% |
70.00 | -30.00% | $8.000 | -20.00% |
80.00 | -20.00% | $9.000 | -10.00% |
85.00 | -15.00% | $9.500 | -5.00% |
90.00(2) | -10.00% | $10.000 | 0.00% |
94.00 | -6.00% | $10.000 | 0.00% |
97.00 | -3.00% | $10.000 | 0.00% |
100.00(3) | 0.00% | $10.000 | 0.00% |
102.00 | 2.00% | $10.270 | 2.70% |
105.00 | 5.00% | $10.675 | 6.75% |
110.00 | 10.00% | $11.350 | 13.50% |
120.00 | 20.00% | $12.700 | 27.00% |
130.00 | 30.00% | $14.050 | 40.50% |
140.00 | 40.00% | $15.400 | 54.00% |
150.00 | 50.00% | $16.750 | 67.50% |
160.00 | 60.00% | $18.100 | 81.00% |
- The Redemption Amount per unit is based on the hypothetical Participation Rate.
- This is the hypothetical Threshold Value.
- The hypothetical Starting Value of 100 used in these examples has been chosen for illustrative purposes only, and does not represent a likely actual Starting Value for the Market Measure.
Leveraged Index Return Notes | ® | TS-4 |
Leveraged Index Return Notes®
Linked to the EURO STOXX 50® Index , due August , 2021
Redemption Amount Calculation Examples
Example 1 | ||||
The Ending Value is 80.00, or 80.00% of the Starting Value: | ||||
Starting Value: | 100.00 | |||
Threshold Value: | 90.00 | |||
Ending Value: | 80.00 | |||
Redemption Amount per unit | ||||
Example 2 | ||||
The Ending Value is 90.00, or 90.00% of the Starting Value: | ||||
Starting Value: | 100.00 | |||
Threshold Value: | 90.00 | |||
Ending Value: | 90.00 | |||
Redemption Amount (per unit) = $10.00, the principal amount, since the Ending Value is less than the Starting Value but equal to or greater than the | ||||
Threshold Value. | ||||
Example 3 | ||||
The Ending Value is 150.00, or 150.00% of the Starting Value: | ||||
Starting Value: | 100.00 | |||
Ending Value: | 150.00 | |||
= $16.75 Redemption Amount per unit | ||||
Leveraged Index Return Notes | ® | TS-5 | ||
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Bank of America Corporation published this content on 08 August 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 August 2019 00:10:09 UTC