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 Common Stock of FedEx Corp. and the Common Stock of American Airlines Group Inc.
|
•
|
Approximate
2.5 year term if not called prior to maturity.
|
|
•
|
Payments
on the Notes will depend on the individual performance of the Common Stock of FedEx Corp. and the Common Stock of American Airlines
Group Inc. (each an “Underlying Stock”).
|
|
•
|
Contingent
coupon rate of 9.20% per annum (2.30% per quarter) payable quarterly if the Observation Value of each Underlying Stock on
the applicable Observation Date is greater than or equal to 50.00% of its Starting Value.
|
|
•
|
Beginning
in January 2020, automatically callable quarterly for an amount equal to the principal amount plus the relevant contingent coupon
if the Observation Value of each Underlying Stock is greater than or equal to 90% of its Starting Value on any Observation
Date (other than the final Observation Date)..
|
|
•
|
Assuming
the Notes are not called prior to maturity, if any Underlying Stock declines by more than 50.00% from its Starting Value,
at maturity your investment will be subject to a 1:1 downside, with up to 100% of the principal at risk; otherwise, at maturity
investors will receive the principal amount. At maturity the investor will also receive the final contingent coupon if the Observation
Value of each Underlying Stock on the final Observation Date is greater than or equal to 50.00% of the 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 October 17, 2019, expected to issue on October 22, 2019 and expected to mature on April 21, 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 $930 and $960 per Note, 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-17 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-4 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-22) 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
|
$30.00
|
$970.00
|
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 $970.00 per Note.
|
The Notes and the related
guarantee:
Are Not FDIC Insured
|
Are Not Bank Guaranteed
|
May Lose Value
|
Selling Agent
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the Common Stock of FedEx Corp. and the Common Stock of American Airlines Group
Terms of the Notes
The
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the Common Stock of FedEx Corp. and the Common Stock
of American Airlines Group Inc. (the “Notes”) provide a quarterly Contingent Coupon Payment of $23.00 on the applicable
Contingent Payment Date if, on any quarterly Observation Date, the Observation Value of each Underlying Stock is greater
than or equal to its Coupon Barrier. Beginning in January 2020, if the Observation Value of each Underlying Stock is greater
than or equal to 90% of its Starting Value on any Observation Date (other than the final Observation Date), the Notes will be automatically
called, in whole but not in part, at 100% of the principal amount, together with the relevant Contingent Coupon Payment. No further
amounts will be payable following an Automatic Call. If the Notes are not automatically called prior to maturity and the Least
Performing Underlying Stock declines by more than 50.00% from its Starting Value, there is full exposure to declines in the Least
Performing Underlying Stock, 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 Stock 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 Underlying Stocks, subject to our and BAC’s credit risk.
Issuer:
|
BofA Finance
|
Guarantor:
|
BAC
|
Denominations:
|
The Notes will be issued in minimum denominations of $1,000 and whole multiples of $1,000 in excess thereof.
|
Term:
|
Approximately 2.5 years, unless previously automatically called.
|
Underlying Stocks:
|
The Common Stock of FedEx Corp. (NYSE symbol: “FDX”) and the Common Stock of American Airlines Group Inc. (NASDAQ symbol: “AAL”).
|
Pricing Date*:
|
October 17, 2019
|
Issue Date*:
|
October 22, 2019
|
Valuation Date*:
|
April 18, 2022, subject to postponement as described under “Description of the Notes—Certain Terms of the Notes—Events Relating to Observation Dates” of the accompanying product supplement. If the Valuation Date is not a business day, the Valuation Date will be postponed to the next business day.
|
Maturity Date*:
|
April 21, 2022
|
Starting Value:
|
With respect to each Underlying Stock, its Closing Market Price on the pricing date.
|
Observation Value:
|
With respect to each Underlying Stock, its Closing Market Price on the applicable Observation Date, multiplied by its Price Multiplier, determined by the calculation agent.
|
Ending Value:
|
With respect to each Underlying Stock, its Observation Value on the Valuation Date.
|
Coupon Barrier:
|
With respect to each Underlying Stock, 50.00% of its Starting Value.
|
Threshold Value:
|
With respect to each Underlying Stock, 50.00% of its Starting Value.
|
Price Multiplier:
|
With respect to each Underlying Stock, 1, subject to adjustment for certain corporate events relating to that Underlying Stock described in the product supplement under “Description of the Notes—Anti-Dilution Adjustments.”
|
Contingent Coupon Payment:
|
If, on any quarterly Observation Date, the Observation Value of each Underlying Stock is greater than or equal to its Coupon Barrier, we will pay a Contingent Coupon Payment of $23.00 per $1,000 in principal amount of Notes (equal to a rate of 2.30% per quarter or 9.20% per annum) on the applicable Contingent Payment Date (including the Maturity Date).
|
Automatic Call:
|
Beginning in January 2020, all (but not less than all) of the Notes will be automatically called if the Observation Value of each Underlying Stock is greater than or equal to 90% of its Starting Value on any Observation Date (other than the final Observation Date). If the Notes are automatically called, the Early Redemption Amount will be paid on the applicable Contingent Payment Date. No further amounts will be payable following an Automatic Call.
|
|
CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-2
|
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the Common Stock of FedEx Corp. and the Common Stock of American Airlines Group
Early Redemption Amount:
|
For each $1,000 in principal amount of Notes, $1,000 plus the applicable Contingent Coupon Payment.
|
Redemption Amount:
|
If the Notes have
not been automatically 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
Stock is greater than or equal to its Threshold Value:
$1,000; or
b)
If the Ending Value of the Least Performing Underlying
Stock is less than its Threshold Value:
$1,000 + ($1,000
x the Underlying Stock Return of the Least Performing Underlying Stock)
In this case,
the Redemption Amount will be less than 50.00% 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 Stock 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.
|
Calculation Agent:
|
BofA Securities, Inc. (“BofAS”), an affiliate of BofA Finance.
|
Selling Agent:
|
BofAS
|
CUSIP:
|
09709TWN7
|
Underlying Stock Return:
|
With respect to
each Underlying Stock,
|
Events of Default and Acceleration:
|
If an Event of Default, as defined in the senior indenture and in the section entitled “Events of Default and Rights of Acceleration” beginning on page 35 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 prices of the Underlying Stocks 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.
|
Least Performing Underlying Stock:
|
The Underlying Stock with the lowest Underlying Stock Return.
|
*Subject to change.
|
|
CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-3
|
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the Common Stock of FedEx Corp. and the Common Stock of American Airlines Group
Observation Dates
and Contingent Payment Dates
Observation Dates*
|
|
Contingent Payment Dates**
|
January 17, 2020
|
|
January 23, 2020
|
April 17, 2020
|
|
April 22, 2020
|
July 17, 2020
|
|
July 22, 2020
|
October 19, 2020
|
|
October 22, 2020
|
January 19, 2021
|
|
January 22, 2021
|
April 19, 2021
|
|
April 22, 2021
|
July 19, 2021
|
|
July 22, 2021
|
October 18, 2021
|
|
October 21, 2021
|
January 18, 2022
|
|
January 21, 2022
|
April 18, 2022 (the “Valuation Date”)
|
|
April 21, 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” on page PS-19 of the accompanying product supplement. If an Observation Date is not a business day, such Observation
Date will be postponed to the next business day.
** Postponement of a quarterly
Observation Date will not cause the postponement of the Contingent Payment Date relating to such Observation Date.
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 Underlying Stocks. 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-17.
|
CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-4
|
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the Common Stock of FedEx Corp. and the Common Stock of American Airlines Group
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
automatically 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 AUTO-CALLABLE YIELD NOTES | PS-5
|
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the Common Stock of FedEx Corp. and the Common Stock of American Airlines Group
Total Contingent Coupon Payment Examples
The
table below illustrates the hypothetical total Contingent Coupon Payments per $1,000 in principal amount of Notes over the term
of the Notes, based on the Contingent Coupon Payment of $23.00, depending on how many Contingent Coupon Payments are payable prior
to an Automatic Call or maturity. Depending on the performance of the Underlying Stocks, you may not receive any Contingent Coupon
Payments during the term of the Notes.
Number of Contingent Coupon Payments
|
Total Contingent Coupon Payments
|
0
|
$0.00
|
2
|
$46.00
|
4
|
$92.00
|
6
|
$138.00
|
8
|
$184.00
|
10
|
$230.00
|
|
CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-6
|
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the Common Stock of FedEx Corp. and the Common Stock of American Airlines Group
Hypothetical Payout Profile and Examples
of Payments at Maturity
Contingent Income Auto-Callable
Yield Notes Table
The following table is for
purposes of illustration only. It assumes the Notes have not been automatically 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, a hypothetical Coupon Barrier of 50 for the Least Performing
Underlying Stock, a hypothetical Threshold Value of 50 for the Least Performing Underlying Stock, the Contingent Coupon Payment
of $23.00 per $1,000 in principal amount of Notes and a range of hypothetical Ending Values of the Least Performing Underlying
Stock. 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 Underlying Stocks, whether the Notes are automatically 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 prices of the Underlying Stocks, see “The Underlying Stocks” section below. The Ending Value of each Underlying
Stock will not include any income generated by dividends paid on that Underlying Stock, which you would otherwise be entitled to
receive if you invested in those Underlying Stocks directly. In addition, all payments on the Notes are subject to Issuer and Guarantor
credit risk.
Ending Value of the
Least Performing Underlying Stock
|
Underlying Stock Return of the
Least Performing Underlying Stock
|
Redemption Amount per Note (including any final Contingent Coupon Payment)
|
Return
on the Notes(1)
|
160.00
|
60.00%
|
$1,023.00 (2)
|
2.30%
|
150.00
|
50.00%
|
$1,023.00
|
2.30%
|
140.00
|
40.00%
|
$1,023.00
|
2.30%
|
130.00
|
30.00%
|
$1,023.00
|
2.30%
|
120.00
|
20.00%
|
$1,023.00
|
2.30%
|
110.00
|
10.00%
|
$1,023.00
|
2.30%
|
105.00
|
5.00%
|
$1,023.00
|
2.30%
|
102.00
|
2.00%
|
$1,023.00
|
2.30%
|
100.00(3)
|
0.00%
|
$1,023.00
|
2.30%
|
90.00
|
-10.00%
|
$1,023.00
|
2.30%
|
80.00
|
-20.00%
|
$1,023.00
|
2.30%
|
70.00
|
-30.00%
|
$1,023.00
|
2.30%
|
50.00(4)
|
-50.00%
|
$1,023.00
|
2.30%
|
49.99
|
-50.01%
|
$499.90
|
-50.01%
|
30.00
|
-70.00%
|
$300.00
|
-70.00%
|
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 Stock.
|
|
(4)
|
This is the hypothetical Coupon Barrier and
Threshold Value of the Least Performing Underlying Stock.
|
|
CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-7
|
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the Common Stock of FedEx Corp. and the Common Stock of American Airlines Group
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-4
of the accompanying prospectus supplement and page 7 of the accompanying prospectus, each as identified on page PS-22 below.
|
•
|
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 automatically called prior to maturity and the Ending Value of any Underlying Stock is less
than its Threshold Value, you will lose 1% of the principal amount for each 1% that the Ending Value of the Least Performing Underlying
Stock is less than its Starting Value. In that case, you will lose a significant portion or all of your investment 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
Ending Value of any Underlying Stock exceeds its Starting Value. Similarly, the amount payable at maturity or upon an Automatic
Call 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 Stock exceeds its Starting Value. In contrast, a direct investment in one or more
of the Underlying Stocks would allow you to receive the benefit of any appreciation in their prices. Thus, any return on the Notes
will not reflect the return you would realize if you actually owned shares of an Underlying Stock and received the dividends paid
or distributions made on them.
|
|
•
|
The Notes are subject
to a potential Automatic Call, which would limit your ability to receive the Contingent Coupon Payments over the full term of the
Notes. The Notes are subject to a potential Automatic Call. Beginning in January 2020, the Notes will be automatically called
if, on any Observation Date (other than the final Observation Date), the Observation Value of each Underlying Stock is greater
than or equal to 90% of its Starting Value. If the Notes are automatically called, you will be entitled to receive the principal
amount and the Contingent Coupon Payment with respect to the applicable Observation Date. In this case, you will lose the opportunity
to continue to receive Contingent Coupon Payments after the date of the Automatic Call. If the Notes are called 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.
|
|
•
|
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 Stock 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 Stock is less than its Coupon Barrier on all the Observation Dates during the term of
the Notes, you will not receive any Contingent Coupon Payment during the term of the Notes, and will not receive a positive return
on the Notes.
|
|
•
|
Your return on the Notes may be less
than the yield on a conventional debt security of comparable maturity. Any return that you receive on the Notes may be less
than the return you would earn if you purchased a conventional debt security with the same Maturity Date. As a result, your investment
in the Notes may not reflect the full opportunity cost to you when you consider factors, such as inflation, that affect the time
value of money. In addition, if interest rates increase during the term of the Notes, the Contingent Coupon Payment (if any) may
be less than the yield on a conventional debt security of comparable maturity.
|
|
•
|
Any payments on the
Notes are 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 or the Maturity Date, regardless of the Ending Value of the Least Performing Underlying Stock
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 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 Underlying Stocks, 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.
|
|
CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-8
|
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the Common Stock of FedEx Corp. and the Common Stock of American Airlines Group
|
•
|
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 prices of the Underlying Stocks, 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 Underlying
Stocks, 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.
|
|
•
|
The Contingent Coupon
Payment, Early Redemption Amount or Redemption Amount, as applicable, will not reflect the prices of the Underlying Stocks other
than on the Observation Dates or the Valuation Date, as applicable. The prices of the Underlying Stocks 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 Underlying Stocks while holding 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 Stock. No other prices of the Underlying Stocks will be taken into account. As a result, if the
Notes are not automatically called prior to maturity, you will receive less than the principal amount at maturity even if the price
of each Underlying Stock has increased at certain times during the term of the Notes before the Least Performing Underlying Stock
decreases to a price that is less than its Threshold Value as of the Valuation Date.
|
|
•
|
Because the Notes
are linked to the least performing (and not the average performance) of the Underlying Stocks, you may not receive any return on
the Notes and may lose some or all of your principal amount even if the Observation Value or Ending Value of one Underlying Stock
is always greater than or equal to its Coupon Barrier or its Threshold Value, as applicable. Your Notes are linked to the least
performing of the Underlying Stocks, and a change in the price of one Underlying Stock may not correlate with changes in the price
of the other Underlying Stock(s). The Notes are not linked to a basket composed of the Underlying Stocks, where the depreciation
in the price of one Underlying Stock could be offset to some extent by the appreciation in the price of the other Underlying Stock(s).
In the case of the Notes, the individual performance of each Underlying Stock would not be combined, and the depreciation in the
price of one Underlying Stock would not be offset by any appreciation in the price of the other Underlying Stock(s). Even if the
Observation Value of an Underlying Stock 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 Stock is below its Coupon Barrier
on that day. In addition, even if the Ending Value of an Underlying Stock is at or above its Threshold Value, you will lose a portion
of your principal if the Ending Value of the Least Performing Underlying Stock is below its Threshold Value.
|
|
•
|
Trading and hedging activities by us, the Guarantor
and any of our other affiliates may create conflicts of interest with you and may affect your return on the Notes and their market
value. We, the Guarantor or one or more of our other affiliates, including BofAS, may buy or sell shares of the Underlying
Stocks, or futures or options contracts on those securities, or other listed or over-the-counter derivative instruments linked
to the Underlying Stocks. 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 affect the prices
of the Underlying Stocks 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 anticipated exposures), may affect the prices of the Underlying Stocks. Consequently, the prices of the Underlying Stocks
may change subsequent to the pricing date, adversely affecting the market value of the Notes.
|
We, the Guarantor or one or
more of our other affiliates, including BofAS, may also engage in hedging activities that could affect the prices of the Underlying
Stocks on the pricing date. 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 prices of the Underlying Stocks, the market value of your Notes prior to maturity or the amounts
payable on the Notes.
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CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-9
|
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the Common Stock of FedEx Corp. and the Common Stock of American Airlines Group
|
•
|
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.
|
|
•
|
The terms of the
Notes will not be adjusted for all corporate events that could affect an issuer of an Underlying Stock. The Price Multiplier,
the determination of the payments on the Notes, and other terms of the Notes may be adjusted for the specified corporate events
affecting any Underlying Stock, as described in the section entitled “Description of the Notes—Anti-Dilution Adjustments”
on page PS-21 of product supplement STOCK-1. However, these adjustments do not cover all corporate events that could affect
the market price of an Underlying Stock, such as offerings of common shares for cash or in connection with certain acquisition
transactions. The occurrence of any event that does not require the calculation agent to adjust the applicable Price Multiplier
or the amounts that may be paid on the Notes at maturity may adversely affect the price of an Underlying Stock, and, as a result,
the market value of the Notes.
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|
•
|
The U.S. federal income tax consequences of an
investment in the Notes are uncertain, and may be adverse to a holder of the Notes. No statutory, judicial, or administrative
authority directly addresses the characterization of the Notes or securities similar to the Notes for U.S. federal income tax purposes.
As a result, significant aspects of the U.S. federal income tax consequences of an investment in the Notes are not certain. Under
the terms of the Notes, you will have agreed with us to treat the Notes as contingent income-bearing single financial contracts,
as described below under “U.S. Federal Income Tax Summary—General.” If the Internal Revenue Service (the “IRS”)
were successful in asserting an alternative characterization for the Notes, the timing and character of gain or loss with respect
to the Notes may differ. No ruling will be requested from the IRS with respect to the Notes and no assurance can be given that
the IRS will agree with the statements made in the section entitled “U.S. Federal Income Tax Summary.” You are urged
to consult with your own tax advisor regarding all aspects of the U.S. federal income tax consequences of investing in the Notes.
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|
CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-10
|
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the Common Stock of FedEx Corp. and the Common Stock of American Airlines Group
The Underlying Stocks
We
have derived the following information on each Underlying Stock and each company issuing each Underlying Stock (each, an “Underlying
Company” and, together, the “Underlying Companies”) from publicly available documents. Because each Underlying
Stock is registered under the Securities Exchange Act of 1934, the Underlying Companies are required to file periodically certain
financial and other information specified by the SEC. Information provided to or filed with the SEC by the Underlying Companies
can be located through the SEC’s web site at sec.gov by reference to the applicable CIK number set forth below.
This
document relates only to the offering of the Notes and does not relate to any offering of Underlying Stock or any other securities
of the Underlying Companies. None of us, the Guarantor, BofAS or any of our other affiliates has made any due diligence inquiry
with respect to the Underlying Companies in connection with the offering of the Notes. None of us, the Guarantor, BofAS or any
of our other affiliates has independently verified the accuracy or completeness of the publicly available documents or any other
publicly available information regarding the Underlying Companies and hence makes no representation regarding the same. Furthermore,
there can be no assurance that all events occurring prior to the date of this document, including events that would affect the
accuracy or completeness of these publicly available documents that would affect the trading price of the Underlying Stocks, have
been or will be publicly disclosed. Subsequent disclosure of any events or the disclosure or failure to disclose material future
events concerning an Underlying Company could affect the price of the applicable Underlying Stock and therefore could affect your
return on the Notes. The selection of the Underlying Stocks is not a recommendation to buy or sell the Underlying Stocks.
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CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-11
|
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the Common Stock of FedEx Corp. and the Common Stock of American Airlines Group
FedEx Corp.
FedEx Corporation is a company that
provides transportation, e-commerce and business services through different companies under the FedEx brand. This Underlying Stock
trades on the NYSE under the symbol “FDX.” The company’s CIK number is 1048911.
The following table shows the
quarterly high and low Closing Market Prices of the shares of this Underlying Stock on its primary exchange from the first quarter
of 2008 through October 10, 2019. 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. These historical trading prices may have been adjusted to reflect
certain corporate actions, such as stock splits and reverse stock splits.
|
High ($)
|
Low ($)
|
2008
|
|
|
First Quarter
|
93.42
|
82.55
|
Second Quarter
|
98.65
|
77.25
|
Third Quarter
|
92.00
|
73.01
|
Fourth Quarter
|
80.74
|
54.94
|
2009
|
|
|
First Quarter
|
64.44
|
34.28
|
Second Quarter
|
61.71
|
44.96
|
Third Quarter
|
79.53
|
53.36
|
Fourth Quarter
|
91.36
|
72.69
|
2010
|
|
|
First Quarter
|
93.40
|
76.69
|
Second Quarter
|
95.62
|
70.11
|
Third Quarter
|
87.29
|
70.70
|
Fourth Quarter
|
95.21
|
85.43
|
2011
|
|
|
First Quarter
|
98.32
|
85.28
|
Second Quarter
|
95.74
|
85.38
|
Third Quarter
|
98.50
|
66.58
|
Fourth Quarter
|
84.92
|
65.15
|
2012
|
|
|
First Quarter
|
96.98
|
84.09
|
Second Quarter
|
92.19
|
84.34
|
Third Quarter
|
92.79
|
84.39
|
Fourth Quarter
|
93.49
|
84.50
|
2013
|
|
|
First Quarter
|
109.07
|
94.25
|
Second Quarter
|
102.17
|
91.87
|
Third Quarter
|
116.83
|
97.77
|
Fourth Quarter
|
143.77
|
112.08
|
2014
|
|
|
First Quarter
|
142.70
|
129.44
|
Second Quarter
|
151.50
|
131.23
|
Third Quarter
|
162.18
|
145.47
|
Fourth Quarter
|
182.03
|
151.26
|
2015
|
|
|
First Quarter
|
181.40
|
164.59
|
Second Quarter
|
184.98
|
166.22
|
Third Quarter
|
171.89
|
140.74
|
Fourth Quarter
|
164.14
|
143.69
|
2016
|
|
|
First Quarter
|
164.54
|
123.18
|
Second Quarter
|
168.27
|
146.13
|
Third Quarter
|
177.30
|
151.45
|
|
CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-12
|
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the Common Stock of FedEx Corp. and the Common Stock of American Airlines Group
Fourth Quarter
|
201.02
|
169.70
|
2017
|
|
|
First Quarter
|
197.42
|
184.61
|
Second Quarter
|
217.33
|
183.56
|
Third Quarter
|
225.58
|
203.55
|
Fourth Quarter
|
251.07
|
214.45
|
2018
|
|
|
First Quarter
|
274.32
|
229.48
|
Second Quarter
|
265.53
|
226.67
|
Third Quarter
|
255.73
|
227.61
|
Fourth Quarter
|
240.94
|
152.70
|
2019
|
|
|
First Quarter
|
185.62
|
157.19
|
Second Quarter
|
198.15
|
152.34
|
Third Quarter
|
176.01
|
143.25
|
Fourth Quarter (through October 10, 2019)
|
146.46
|
138.39
|
|
CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-13
|
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the Common Stock of FedEx Corp. and the Common Stock of American Airlines Group
American Airlines Group Inc.
American Airlines Group Inc. operates
an airline that provides passenger, freight, and mail service throughout North America, the Caribbean, Latin America, Europe, and
the Pacific. The company also provides connecting service throughout the United States, Canada, and the Caribbean. This Underlying
Stock trades on the NASDAQ under the symbol “AAL.” The company’s CIK number is 6021.
The following table shows the
quarterly high and low Closing Market Prices of the shares of this Underlying Stock on its primary exchange on its primary exchange
from the date of American Airlines Group Inc.’s initial public offering on December 9, 2013 October 10, 2019. 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. These historical trading prices may have been adjusted to reflect certain corporate actions, such as stock
splits and reverse stock splits.
|
High ($)
|
Low ($)
|
2013
|
|
|
Fourth Quarter
|
26.61
|
24.60
|
2014
|
|
|
First Quarter
|
39.02
|
25.36
|
Second Quarter
|
44.55
|
33.37
|
Third Quarter
|
43.86
|
35.03
|
Fourth Quarter
|
53.63
|
28.58
|
2015
|
|
|
First Quarter
|
55.76
|
46.53
|
Second Quarter
|
52.71
|
39.48
|
Third Quarter
|
43.99
|
37.50
|
Fourth Quarter
|
46.50
|
38.13
|
2016
|
|
|
First Quarter
|
43.47
|
35.55
|
Second Quarter
|
41.34
|
25.27
|
Third Quarter
|
39.35
|
28.35
|
Fourth Quarter
|
49.64
|
37.38
|
2017
|
|
|
First Quarter
|
49.59
|
40.35
|
Second Quarter
|
51.43
|
40.90
|
Third Quarter
|
54.22
|
42.92
|
Fourth Quarter
|
53.03
|
45.74
|
2018
|
|
|
First Quarter
|
58.47
|
48.36
|
Second Quarter
|
52.14
|
37.96
|
Third Quarter
|
43.60
|
35.96
|
Fourth Quarter
|
40.16
|
29.72
|
2019
|
|
|
First Quarter
|
36.93
|
30.06
|
Second Quarter
|
34.81
|
27.20
|
Third Quarter
|
34.59
|
24.45
|
Fourth Quarter (through October 10, 2019)
|
27.61
|
25.27
|
|
CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-14
|
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the Common Stock of FedEx Corp. and the Common Stock of American Airlines Group
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.
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 $970.00 per Note.
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 Underlying Stocks 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
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”) which has implemented the Prospectus Regulation (each, a “Relevant
Member 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 Member 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 have
authorized, nor do they 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 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. 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), as amended
or superseded, 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 has been prepared and therefore offering or selling the Notes or otherwise
making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.
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
|
CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-15
|
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the Common Stock of FedEx Corp. and the Common Stock of American Airlines Group
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 the Issuer or
the 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 AUTO-CALLABLE YIELD NOTES | PS-16
|
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the Common Stock of FedEx Corp. and the Common Stock of American Airlines Group
Structuring the Notes
The Notes
are our debt securities, the return on which is linked to the performance of the Underlying Stocks. 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 Underlying Stocks, 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-16 of the accompanying product supplement.
|
CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-17
|
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the Common Stock of FedEx Corp. and the Common Stock of American Airlines Group
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. In addition, any reference to “Morrison & Foerster LLP” in the aforementioned
tax discussions in the accompanying prospectus and prospectus supplement should be read as a reference to “Sidley Austin
LLP.” 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 Bank of America Corporation for U.S. federal income tax purposes. Accordingly throughout
this tax discussion, references to “we,” “our” or “us” are generally to Bank of America Corporation
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 Underlying Stocks 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 Underlying Stocks. 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 Underlying
Stocks 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 Underlying Stock would be treated as a “passive foreign investment company” (“PFIC”),
within the meaning of Section 1297 of the Code, or a United States real property holding corporation, within the meaning of Section
897(c) of the Code. If the issuer of any Underlying Stock 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 Underlying
Stocks and consult your tax advisor regarding the possible consequences to you, if any, if the issuer of any Underlying Stock is
or becomes a PFIC or is or becomes a United States real property holding corporation.
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CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-18
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Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the Common Stock of FedEx Corp. and the Common Stock of American Airlines Group
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.
Non-U.S. Holders
Because the U.S. federal income tax treatment
of the Notes (including any Contingent Coupon Payment) is uncertain, we will withhold U.S. federal income tax at a 30% rate (or
at a lower rate under an applicable income tax treaty) on the entire amount of any Contingent Coupon Payment made unless such payments
are effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the U.S. (in which case, to avoid withholding,
the Non-U.S. Holder will be required to provide a Form W-8ECI). We will not pay any additional amounts in respect of such withholding.
To claim benefits under an income tax treaty, a Non-U.S. Holder must obtain a taxpayer identification number and certify as to
its eligibility under
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CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-19
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Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the Common Stock of FedEx Corp. and the Common Stock of American Airlines Group
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, 2021. 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 Underlying Stocks 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 Underlying
Stocks 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.
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CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-20
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Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the Common Stock of FedEx Corp. and the Common Stock of American Airlines Group
Foreign Account Tax Compliance Act (“FATCA”)
The discussion in the accompanying prospectus
under “U.S. Federal Income Tax Considerations – Foreign Account Tax Compliance Act” is hereby modified to reflect
regulations proposed by Treasury indicating its intent to eliminate the requirements under FATCA of withholding on gross proceeds
from the sale, exchange, settlement at maturity, or other disposition of relevant financial instruments. Treasury has indicated
that taxpayers may rely on these proposed regulations pending their finalization.
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CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-21
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Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the Common Stock of FedEx Corp. and the Common Stock of American Airlines Group
Where You Can Find More Information
The terms and risks of the Notes are
contained in this pricing supplement and in the following related product supplement, prospectus supplement and prospectus, which
can be accessed at the following links:
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•
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Product
Supplement STOCK-1 dated November 30, 2016:
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https://www.sec.gov/Archives/edgar/data/70858/000119312516780826/d304271d424b2.htm
These documents
(together, the “Note Prospectus”) have been filed as part of a registration statement with the SEC, which may, without
cost, be accessed on the SEC website at www.sec.gov or obtained from BofAS by calling 1-800-294-1322. Before you invest, you should
read the Note Prospectus, including this pricing supplement, for information about us, BAC and this offering. Any prior or contemporaneous
oral statements and any other written materials you may have received are superseded by the Note Prospectus. Capitalized 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.
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, prospectus supplement and prospectus,
as such references relate to MLPF&S’s institutional services, should now be read as references to BofAS.
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, except obligations
that are subject to any priorities or preferences by law. Any payments due on the Notes, including any repayment of the principal
amount, will be subject to the credit risk of BofA Finance, as issuer, and BAC, as guarantor.
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CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-22
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