Base Dividend:
|
From the issue date to the maturity date, $0.70 per calendar quarter per share of the Underlying Stock. The Base Dividend is used to calculate any adjustments to the Price Multiplier for cash dividends.
|
Payment of the Notes at Maturity:
|
Redemption Amount:
|
Your payment at maturity, for each $1,000 in principal amount
of the notes, will be the greater of:
·
$1,000; and
·
the Alternative Settlement Amount (as defined
above)
|
|
Additional Roles of BofAS:
|
Calculation Agent:
|
BofA Securities, Inc. (“BofAS”), an affiliate of BofA Finance.
|
Selling Agent:
|
BofAS
|
You should read carefully this entire
pricing supplement, product supplement, prospectus supplement, and prospectus to understand fully the terms of the notes, as well
as the tax and other considerations important to you in making a decision about whether to invest in the notes. In particular,
you should review carefully the section in this pricing supplement entitled “Risk Factors,” which highlights a number
of risks of an investment in the notes, to determine whether an investment in the notes is appropriate for you. If information
in this pricing supplement is inconsistent with the product supplement, prospectus supplement or prospectus, this pricing supplement
will supersede those documents. You are urged to consult with your own attorneys and business and tax advisors before making a
decision to purchase any of the notes.
The information in this “Summary”
section is qualified in its entirety by the more detailed explanation set forth elsewhere in this pricing supplement and the accompanying
product supplement, prospectus supplement and prospectus. You should rely only on the information contained in this pricing supplement
and the accompanying product supplement, prospectus supplement and prospectus. We have not authorized any other person to provide
you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. None
of us, the Guarantor or BofAS is making an offer to sell these notes in any jurisdiction where the offer or sale is not permitted.
You should assume that the information in this pricing supplement, the accompanying product supplement, prospectus supplement,
and prospectus is accurate only as of the date on their respective front covers.
Capitalized terms used but not defined
in this pricing supplement have the meanings set forth in the accompanying product supplement, prospectus supplement and prospectus.
Unless otherwise indicated or unless the context requires otherwise, all references in this pricing supplement to “we,”
“us,” “our,” or similar references are to BofA Finance, and not to BAC (or any other affiliate of BofA
Finance).
The accompanying documents referenced
above may be accessed at the following links:
|
·
|
Product supplement STOCK-1 dated November 30, 2016:
|
https://www.sec.gov/Archives/edgar/data/70858/000119312516780826/d304271d424b2.htm
|
·
|
Series A MTN prospectus supplement dated November
4, 2016 and prospectus dated November 4, 2016:
|
https://www.sec.gov/Archives/edgar/data/70858/000119312516760144/d266649d424b3.htm
As a result of the completion of the reorganization
of Bank of America’s U.S. broker-dealer business, references to Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”)
in the accompanying product supplement STOCK-1, prospectus supplement and prospectus, as such references relate to MLPF&S’s
institutional services, should now be read as references to BofAS.
Hypothetical Payments on the Notes
The following table is for purposes of illustration
only. It is based on
hypothetical
values and shows
hypothetical
returns on the notes. The table set forth below assumes
an Initial Reference Price of $50, a hypothetical Threshold Price of $55.50 (equal to 111% of the hypothetical Initial Reference
Price) and that the Final Stock Price is as set forth below.
The actual amount you receive and the total resulting return will
depend on the actual Initial Reference Price and Final Stock Price of the Underlying Stock.
The numbers appearing in the table
set forth below have been rounded for ease of analysis, and do not take into account any tax consequences from investing in the
notes.
For recent actual prices of the Underlying
Stock, see “The Underlying Stock” section below. The Final Stock Price of the Underlying Stock will not include any
income generated by dividends paid on the Underlying Stock, which you would otherwise be entitled to receive if you invested in
the Underlying Stock directly. In addition, all payments on the notes are subject to issuer and Guarantor credit risk.
The following table illustrates how the
payment at maturity is calculated.
Final
Stock Price
|
Percentage Change from
Initial Reference Price to
Final Stock Price
|
Alternative
Settlement Amounts
|
Final Payment at
Maturity
|
$95.00
|
90.00%
|
$1,711.71
|
$1,711.71
|
$90.00
|
80.00%
|
$1,621.62
|
$1,621.62
|
$85.00
|
70.00%
|
$1,531.53
|
$1,531.53
|
$80.00
|
60.00%
|
$1,441.44
|
$1,441.44
|
$75.00
|
50.00%
|
$1,351.35
|
$1,351.35
|
$70.00
|
40.00%
|
$1,261.26
|
$1,261.26
|
$65.00
|
30.00%
|
$1,171.17
|
$1,171.17
|
$60.00
|
20.00%
|
$1,081.08
|
$1,081.08
|
$55.50
|
11.00%
|
$1,000.00
|
$1,000.00
(1)
|
$52.50
|
5.00%
|
$945.95
|
$1,000.00
(2)
|
$50.00
|
0.00%
|
$900.90
|
$1,000.00
|
$45.00
|
-10.00%
|
$810.81
|
$1,000.00
|
$40.00
|
-20.00%
|
$720.72
|
$1,000.00
|
$35.00
|
-30.00%
|
$630.63
|
$1,000.00
|
$30.00
|
-40.00%
|
$540.54
|
$1,000.00
|
$25.00
|
-50.00%
|
$450.45
|
$1,000.00
|
$20.00
|
-60.00%
|
$360.36
|
$1,000.00
|
$15.00
|
-70.00%
|
$270.27
|
$1,000.00
|
$10.00
|
-80.00%
|
$180.18
|
$1,000.00
|
$5.00
|
-90.00%
|
$90.09
|
$1,000.00
|
$0.00
|
-100.00%
|
$0.00
|
$1,000.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) As set forth above, the payment at maturity will only exceed
the principal amount if the Final Stock Price exceeds the Threshold Price.
(2) As set forth above, the
payment at maturity cannot be less than the principal amount.
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.
The notes do not bear interest.
Unlike a conventional debt security, no interest payments will be paid over the term of the notes, regardless of the extent to
which the Final Stock Price exceeds its Threshold Price or the Initial Reference Price. Payments on the notes will be limited only
to the payment at maturity.
Your return on the notes may be less
than the yield on a conventional debt security of comparable maturity.
Any return that you receive on the notes, may be less
than the return you would earn if you purchased a conventional debt security with the same maturity date. As a result, your investment
in the notes may not reflect the full opportunity cost to you when you consider factors, such as inflation, that affect the time
value of money.
The return on your notes may
be zero.
Unless the Final Stock Price appreciates beyond the Threshold Price, you will not receive any additional return at
maturity, even if the Final Stock Price appreciates from the Initial Reference Price. Therefore, the Redemption Amount may be limited
to the principal amount of your notes (a zero return).
You will have no rights in the
Underlying Stock.
As a holder of the notes, you will not have any ownership interest or rights in the Underlying Stock, such
as voting rights or rights to receive cash dividends or other distributions. In addition, the Underlying Company will not have
any obligation to consider your interests as a holder of the notes in taking any corporate action that might affect the value of
the Underlying Stock and the notes.
There are risks associated with
a single Underlying Stock.
The price of the Underlying Stock can fall sharply due to factors specific to the Underlying Stock
and the Underlying Company, such as stock price volatility, earnings, financial conditions, corporate, industry and regulatory
developments, management changes and decisions and other events, as well as general market factors, such as general stock market
volatility and levels, interest rates and economic and political conditions.
You will not participate in the full
appreciation of the Underlying Stock.
If the Final Stock Price is greater than the Threshold Price, the payment on the notes
at maturity will reflect only appreciation of the Underlying Stock in excess of the Threshold Price. For example, given that the
Threshold Price is 111% of the Initial Reference Price, if the applicable Final Price was equal to 120% of the Initial Reference
Price, the payment on the notes would be only $1,081.08 per $1,000 in principal amount of the notes, for a return of 8.108%, even
though the Underlying Stock appreciated 20% from the Initial Reference Price.
In contrast, a direct investment in the
Underlying Stock would allow you to receive the benefit of any appreciation in its value. Thus, any return on the notes will not
reflect the return you would realize if you actually owned shares of the Underlying Stock and received the dividends paid or distributions
made on them.
The Underlying Stock has limited actual
historical information.
The Underlying Stock commenced trading on the New York Stock Exchange (“NYSE”) recently.
Because the Underlying Stock is of recent origin and limited actual historical performance data exists with respect to it, your
investment in the notes may involve a greater risk than investing in notes linked to an Underlying with a more established record
of performance.
Any payment on the notes is subject
to our credit risk and the credit risk of the Guarantor, and actual or perceived changes in our 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 any payment on the notes will be dependent upon our ability and the ability of the Guarantor to repay
our obligations under the notes on the applicable payment date, regardless of how the Underlying Stock performs. No assurance can
be given as to what our financial condition or the financial condition of the Guarantor will be at any time during the
term of the notes. If we and the Guarantor become unable to
meet our respective financial obligations as they become due
,
you may not receive the amounts payable under the terms of the notes.
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 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 price of the Underlying Stock, 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, will have limited assets and operations.
We are a finance subsidiary of BAC and will have no assets, operations or revenues
other than those related to the issuance, administration and repayment of our debt securities that are guaranteed by the Guarantor.
As a finance subsidiary, to meet our obligations under the notes, we are dependent upon payment or contribution of funds and/or
repayment of outstanding loans from the Guarantor and/or its other subsidiaries. Therefore, our ability to make payments on the
notes may be limited. In addition, we will have no independent assets available for distributions to holders of the notes if they
make claims in respect of the notes in a bankruptcy, resolution or similar proceeding. Accordingly, any recoveries by such holders
may be limited to those available under the related guarantee by the Guarantor, and that guarantee will rank equally with all other
unsecured senior obligations of the Guarantor.
Neither the offering of the notes
nor any views which we, the Guarantor or our other affiliates from time to time may express in the ordinary course of our or their
businesses constitutes a recommendation as to the merits of an investment in the notes.
The public offering price you pay
for the notes exceeds their initial estimated value.
The initial estimated value of the notes that is provided on the cover
page of this pricing supplement is an estimate only, determined as of the pricing date by reference to our and our affiliates’
pricing models. These pricing models consider certain assumptions and variables, including our credit spreads and those of the
Guarantor, the Guarantor’s internal funding rate, mid-market terms on hedging transactions, expectations on interest rates,
dividends and volatility, price-sensitivity analysis, and the expected term of the notes. These pricing models rely in part on
certain forecasts about future events, which may prove to be incorrect.
The initial estimated value does not
represent a minimum or maximum price at which we, the Guarantor, 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 the pricing date will
vary based on many factors that cannot be predicted with accuracy, including our and the Guarantor’s creditworthiness and
changes in market conditions.
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 price of the Underlying Stock, the Guarantor’s internal funding rate, and the
inclusion in the public offering price of 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.
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.
The development of a trading market for
the notes will depend on the Guarantor’s financial performance and other factors, including changes in the price of the Underlying
Stock. The number of potential buyers of your notes in any secondary market may be limited. We anticipate that BofAS will act as
a market-maker for the notes, but none of us, the Guarantor or BofAS is required to do so. There is no assurance that any party
will be willing to purchase your notes at any price in any secondary market. BofAS may discontinue its market-making activities
as to the notes at any time. To the extent that BofAS engages in any market-making activities, it may bid for or offer the notes.
Any price at which BofAS may bid for, offer, purchase, or sell any notes may differ from the values determined by pricing models
that it may use, whether as a result of dealer discounts, mark-ups, or other transaction costs. These bids,
offers, or completed transactions may affect the prices, if
any, at which the notes might otherwise trade in the market.
In addition, if at any time BofAS were
to cease acting as a market-maker as to the notes, it is likely that there would be significantly less liquidity in the secondary
market. In such a case, the price at which the notes could be sold likely would be lower than if an active market existed.
Trading and hedging activities by
us, the Guarantor and any of our other affiliates may affect your return on the notes and their market value.
We, the Guarantor
and our other affiliates, including BofAS, may buy or sell shares of the Underlying Stock, or futures or options contracts on those
securities, or other listed or over-the-counter derivative instruments linked to the Underlying Stock. We, the Guarantor and any
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 could affect the prices of the Underlying Stock
in a manner that could be adverse to your investment in the notes. On or before the day in which the Initial Reference Price was
determined, 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 anticipated exposures), may have affected the price of the Underlying Stock. Consequently, the price
of the Underlying Stock may change after the Initial Reference Price was determined, adversely affecting the market value of the
notes.
We, the Guarantor or one or more of our
other affiliates, including BofAS, may also have engaged in hedging activities that could have affected the price of the Underlying
Stock on or before the day on which Initial Reference Price was determined. In addition, these activities 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 price of the Underlying Stock, the market
value of your notes prior to maturity or the amounts payable on the notes.
Our trading, hedging and other business
activities may create conflicts of interest with you.
We, the Guarantor or one or more of our other affiliates, including BofAS,
may engage in trading activities related to the Underlying Stock that are not for your account or on your behalf. We, the Guarantor
or one or more of our other affiliates, including BofAS, also may issue or underwrite other financial instruments with returns
based upon the Underlying Stock. These trading and other business activities 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 proprietary accounts,
in facilitating transactions, including block trades, for our or their other customers, and in accounts under our or their management.
These trading and other business activities, if they influence the price of the Underlying Stock or secondary trading in your notes,
could be adverse to your interests as a beneficial owner of the notes.
We expect to enter into arrangements
or adjust or close out existing transactions to hedge our obligations under the notes. We, the Guarantor or our other affiliates,
including BofAS, also may enter into hedging transactions relating to other notes or instruments, some of which may have returns
calculated in a manner related to that of the notes offered hereby. We may enter into such hedging arrangements with one of our
affiliates. Our affiliates may enter into additional hedging transactions with other parties relating to the notes and the Underlying
Stock. This hedging activity is expected to result in a profit to those engaging in the hedging activity, which could be more or
less than initially expected, or the hedging activity could also result in a loss. We and our affiliates will price these hedging
transactions with the intent to realize a profit, regardless of whether the value of the notes increases or decreases. Any profit
in connection with such hedging activities will be in addition to any other compensation that we, the Guarantor and our other affiliates,
including BofAS, receive for the sale of the notes, which creates an additional incentive to sell the notes to you.
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. Under some circumstances, these duties could result in a conflict of interest between its status as our affiliate
and its responsibilities as calculation agent. These conflicts could occur, for instance, in connection with the calculation agent’s
determination as to whether a Market Disruption Event (as defined in the accompanying product supplement) has occurred, or in connection
with judgments that it would be required to make if certain corporate events occur as to the Underlying Stock. The calculation
agent will be required to carry out its duties in good faith
and use its reasonable judgment. However, because we expect that the Guarantor will control the calculation agent, potential conflicts
of interest could arise.
The Initial Reference Price was determined
in the sole discretion of the calculation agent. Although the calculation agent made all determinations and took all actions in
relation to establishing the Initial Reference Price and, in turn, the Threshold Price, in good faith, it should be noted that
such discretion could have had an impact (positive or negative) on the value of your notes. The calculation agent is under no obligation
to consider your interests as a holder of the notes in taking any actions, including the determination of the Initial Reference
Price and, in turn, the Threshold Price, that might have affected the value of your notes.
The anti-dilution adjustments for
the Underlying will be limited.
The calculation agent may adjust the Price Multiplier for the Underlying Stock and other terms
of the notes to reflect certain corporate actions, as described in this document and in the accompanying product supplement. The
calculation agent will not be required to make an adjustment for every event that may affect the Underlying Stock, and will have
broad discretion to determine whether and to what extent an adjustment is required.
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. We
intend to treat the notes as debt instruments for U.S. federal income tax purposes. Accordingly, you should consider the tax consequences
of investing in the notes, aspects of which are uncertain. See the section entitled “U.S. Federal Income Tax Summary.”
You may be required to include income
on the notes over their term, even though you will not receive any payments until maturity.
The notes will be considered to
be issued with original issue discount. You will be required to include income on the notes over their term based upon a comparable
yield, even though you will not receive any payments until maturity. You are urged to review the section entitled “U.S. Federal
Income Tax Summary” and consult your own tax advisor.
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
.
* * *
Investors in the notes should review the additional risk
factors set forth beginning on page PS-5 of the accompanying product supplement, page S-4 of the accompanying prospectus supplement,
and page 7 of the accompanying prospectus prior to making an investment decision.