Subject to Completion
Preliminary Term Sheet dated August
31
, 2017
|
Filed Pursuant to Rule 424(b)(2)
Registration Statement No. 333-213265 (To Prospectus dated November 4, 2016, Prospectus Supplement dated November 4, 2016 and Product Supplement EQUITY INDICES SUN-1 dated November 28, 2016) |
Per Unit
|
Total
|
|
Public offering price
(1)
|
$
10.00
|
$
|
Underwriting discount
(1)
|
$
0.20
|
$
|
Proceeds, before expenses, to
BofA
Finance
|
$
9.80
|
$
|
(1)
|
For any purchase of 500,000 units or more in a single transaction by an individual investor or in combined transactions with the investor's household in this offering, the public offering price and the underwriting discount will be $9.95 per unit and $0.15 per unit, respectively.
See Supplement to the Plan of Distribution; Conflicts of Interest below.
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Are Not FDIC Insured
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Are Not Bank Guaranteed
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May Lose Value
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Autocallable Market-Linked Step Up Notes
Linked to the PHLX Housing Sector SM Index, due September , 2019 |
|
Autocallable Market-Linked Step Up Notes
|
TS-
2
|
Autocallable Market-Linked Step Up Notes
Linked to the PHLX Housing Sector SM Index, due September , 2019 |
|
Autocallable Market-Linked Step Up Notes
|
TS-
3
|
Autocallable Market-Linked Step Up Notes
Linked to the PHLX Housing Sector SM Index, due September , 2019 |
|
■
|
Product supplement EQUITY INDICES SUN-1 dated November 28, 2016:
http://www.sec.gov/Archives/edgar/data/70858/000119312516778291/d301449d424b5.htm ">https://www.sec.gov/Archives/edgar/data/70858/000119312516778291/d301449d424b5.htm |
■
|
Series A MTN prospectus supplement dated November 4, 2016 and prospectus dated November 4, 2016:
http://www.sec.gov/Archives/edgar/data/70858/000119312516760144/d266649d424b3.htm ">https://www.sec.gov/Archives/edgar/data/70858/000119312516760144/d266649d424b3.htm |
You may wish to consider an investment in the notes if:
|
The notes may not be an appropriate investment for you if:
|
■
You are willing to receive a return on your investment capped at the return represented by the Call Premium if the Observation Level is equal to or greater than the Call Level.
■
You anticipate that the notes will be automatically called or the Index will increase from the Starting Value to the Ending Value.
■
You are willing to risk a loss of principal and return if the notes are not automatically called and the Index decreases from the Starting Value to the Ending Value.
■
You are willing to forgo the interest payments that are paid on conventional interest bearing debt securities.
■
You are willing to forgo dividends or other benefits of owning the stocks included in the Index.
■
You are willing to accept a limited or no market for sales prior to maturity, and understand that the market prices for the notes, if any, will be affected by various factors, including our and BAC
’
s actual and perceived creditworthiness, BAC
’
s internal funding rate and fees and charges on the notes.
■
You are willing to assume our credit risk, as issuer of the notes, and BAC
’
s credit risk, as guarantor of the notes, for all payments under the notes, including the Call Amount or the Redemption Amount, as applicable.
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■
You want to hold your notes for the full term.
■
You believe that the notes will not be automatically called and the Index will decrease from the Starting Value to the Ending Value.
■
You seek principal repayment or preservation of capital.
■
You seek interest payments or other current income on your investment.
■
You want to receive dividends or other distributions paid on the stocks included in the Index.
■
You seek an investment for which there will be a liquid secondary market.
■
You are unwilling or are unable to take market risk on the notes
,
to take our credit risk as issuer of the notes
,
or to take BAC
’
s credit risk, as guarantor of the notes.
|
Autocallable Market-Linked Step Up Notes
|
TS-
4
|
Autocallable Market-Linked Step Up Notes
Linked to the PHLX Housing Sector SM Index, due September , 2019 |
|
Autocallable Market-Linked Step Up Notes
|
This graph reflects the returns on the notes, based on a Threshold Value of 100% of the Starting Value, a Step Up Payment of $1.80 per unit (the midpoint of the Step Up Payment range of [$1.50 to $2.10]) and a Step Up Value of 118% of the Starting Value (the midpoint of the Step Up Value range of [115% to 121%]). The green line reflects the returns on the notes, while the dotted gray line reflects the returns of a direct investment in the stocks included in the Index
, excluding dividends
.
This graph has been prepared for purposes of illustration only.
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Ending Value
|
Percentage Change from the Starting Value to the Ending Value
|
Redemption Amount per Unit
|
Total Rate of Return on the Notes
|
0.00
|
-100.00%
|
$0.00
|
-100.00%
|
50.00
|
-50.00%
|
$5.00
|
-50.00%
|
80.00
|
-20.00%
|
$8.00
|
-20.00%
|
90.00
|
-10.00%
|
$9.00
|
-10.00%
|
94.00
|
-6.00%
|
$9.40
|
-6.00%
|
97.00
|
-3.00%
|
$9.70
|
-3.00%
|
100.00
(1)(2)
|
0.00%
|
$11.80
(3)
|
18.00%
|
102.00
|
2.00%
|
$11.80
|
18.00%
|
105.00
|
5.00%
|
$11.80
|
18.00%
|
110.00
|
10.00%
|
$11.80
|
18.00%
|
118.00
(4)
|
18.00%
|
$11.80
|
18.00%
|
120.00
|
20.00%
|
$12.00
|
20.00%
|
130.00
|
30.00%
|
$13.00
|
30.00%
|
132.00
|
32.00%
|
$13.20
|
32.00%
|
140.00
|
40.00%
|
$14.00
|
40.00%
|
150.00
|
50.00%
|
$15.00
|
50.00%
|
160.00
|
60.00%
|
$16.00
|
60.00%
|
(1)
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The
hypothetical
Starting Value of 100 used in these examples has been chosen for illustrative purposes only, and does not represent a likely actual Starting Value for the Market Measure.
|
(2)
|
This is the
hypothetical
Threshold Value.
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(3)
|
This amount represents the sum of the principal amount and the
hypothetical
Step Up Payment of $1.80.
|
(4)
|
This is the
hypothetical
Step Up Value.
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Autocallable Market-Linked Step Up Notes
|
TS-
5
|
Autocallable Market-Linked Step Up Notes
Linked to the PHLX Housing Sector SM Index, due September , 2019 |
|
Example 1
|
|
The Ending Value is 90.00, or 90.00% of the Starting Value:
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Starting Value:
100.00
|
|
Threshold Value:
100.00
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Ending Value:
90.00
|
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Redemption Amount per unit
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Example 3
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The Ending Value is 132.00, or 132.00% of the Starting Value:
|
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Starting Value:
100.00
|
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Step Up Value:
118.00
|
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Ending Value:
132.00
|
|
|
Redemption Amount per unit
|
Autocallable Market-Linked Step Up Notes
|
TS-
6
|
Autocallable Market-Linked Step Up Notes
Linked to the PHLX Housing Sector SM Index, due September , 2019 |
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■
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If the notes are not automatically called, depending on the performance of the Index as measured shortly before the maturity date, your investment may result in a loss; there is no guaranteed return of principal.
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■
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Your return on the notes may be less than the yield you could earn by owning a conventional fixed or floating rate debt security of comparable maturity.
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■
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Payments on the notes are subject to our credit risk, and the credit risk of BAC, and actual or perceived changes in our or BAC’s creditworthiness are expected to affect the value of the notes. If we and BAC become insolvent or are unable to pay our
respective
obligations, you may lose your entire investment.
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■
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If the notes are called, your investment return is limited to the return represented by the Call Premium.
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■
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Your investment return may be less than a comparable investment directly in the stocks included in the Index.
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■
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We are a finance subsidiary and, as such, will have limited assets and operations.
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■
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BAC’s obligations under its guarantee of the notes will be structurally subordinated to liabilities of its subsidiaries
.
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■
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The notes issued by us will not have the benefit of any cross-default or cross-acceleration with other indebtedness of BofA Finance or BAC: events of bankruptcy or insolvency or resolution proceedings relating to BAC and covenant breach by BAC will not constitute an event of default with respect to the notes
.
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■
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The initial estimated value of the notes
considers assumptions and variables and relies in part on certain forecasts about future events, which may prove to be incorrect. The initial estimate
d
value of the notes
is an estimate 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 BAC, BAC’s internal funding
rate on the pricing date, mid-market terms on hedging transactions, expectations on interest rates 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.
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■
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The public offering price you pay for the notes will exceed the initial estimated value. 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 the initial estimated value. This is due to, among other things, changes in the
level of the Index
,
BAC’s internal funding rate
, and the inclusion in the public offering price of the underwriting discount and the hedging related charge, all as further described in Structuring the Notes
beginning
on page TS-
13
. These factors, together with various credit, market and economic factors over the term of the notes, are expected to reduce the price at which you may be able to sell the notes in any secondary market and will affect the value of the notes in complex and unpredictable ways.
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■
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The initial estimated value does not represent a minimum or maximum price at which we,
BAC,
MLPF&S 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
Index
, our
and BAC’s
creditworthiness and changes in market conditions.
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■
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A trading market is not expected to develop for the notes.
None of us, BAC or
MLPF&S is obligated to make a market for, or to repurchase, the notes. There is no assurance that any party will be willing to purchase your notes at any price in any secondary market.
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■
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BAC and its affiliates’ hedging and trading activities (including trades in shares of companies included in the Index) and any hedging and trading activities BAC or its affiliates engage in that are not for your account or on your behalf, may affect the market value and return of the notes and may create conflicts of interest with you.
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■
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The Index sponsor may adjust the Index in a way that affects its level, and has no obligation to consider your interests.
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You will have no rights of a holder of the securities represented by the Index, and you will not be entitled to receive securities or dividends or other distributions by the issuers of those securities.
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While BAC and our other affiliates may from time to time own securities of companies included in the Index, we, BAC and our other affiliates do not control any company included in the Index, and
have
not
verified
any disclosure made by any other company.
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There may be potential conflicts of interest involving the calculation agent, which is an affiliate of ours. We have the right to appoint and remove the calculation agent.
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The U.S. federal income tax consequences of the notes are uncertain, and may be adverse to a holder of the notes. See Summary Tax Consequences below and U.S. Federal Income Tax Summary beginning on page PS-28 of product supplement EQUITY INDICES SUN-1.
|
Autocallable Market-Linked Step Up Notes
|
TS-
7
|
Autocallable Market-Linked Step Up Notes
Linked to the PHLX Housing Sector SM Index, due September , 2019 |
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●
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employment levels and job growth;
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●
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the availability of financing for home buyers;
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●
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market interest rates;
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●
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consumer confidence;
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●
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housing demand and real estate values;
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●
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the availability of suitable undeveloped land;
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●
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raw material and labor shortages and price fluctuations;
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●
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federal, state, and local laws and regulations concerning the development of land, housing construction, home sales, consumer financing, and environmental protection;
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●
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competition among companies which engage in the housing construction business; and
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●
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the supply of homes and other housing alternatives.
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Autocallable Market-Linked Step Up Notes
|
TS-
8
|
Autocallable Market-Linked Step Up Notes
Linked to the PHLX Housing Sector SM Index, due September , 2019 |
|
■
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the security must be listed on the New York Stock Exchange, the Nasdaq Stock Market, or NYSE Amex Equities U.S.;
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■
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the issuer of the security must be classified, as reasonably determined by NASDAQ OMX, as a company whose primary business is associated with the U.S. housing construction market under certain Industry Classification Benchmark codes, which are products of FTSE International Limited and are licensed for use by the Index Sponsor;
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■
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only one class of security per issuer is allowed;
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■
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the security must have a market capitalization of at least $100 million;
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■
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the security must have traded at least 1.5 million shares in each of the last six months;
|
Autocallable Market-Linked Step Up Notes
|
TS-
9
|
Autocallable Market-Linked Step Up Notes
Linked to the PHLX Housing Sector SM Index, due September , 2019 |
|
■
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the security must have listed options on a recognized options market in the U.S. or be eligible for listed-options trading on a recognized options market in the U.S.;
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■
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the security may not be issued by an issuer currently in bankruptcy proceedings;
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■
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the issuer of the security may not have entered into a definitive agreement or other arrangement which would likely result in the security no longer being eligible for the Index;
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■
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the issuer of the security may not have annual financial statements with an audit opinion that is currently withdrawn; and
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■
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the issuer of the security must have seasoned on a recognized market for at least six months; in the case of spin-offs, the operating history of the spin-off will be considered.
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■
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no single Index Security is greater than 20% of the weight of the Index, and the top five Index Securities do not constitute more than 55% of the weight of the Index; and
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■
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no more than 15% of the weight of the Index is composed of non-U.S. component securities that are not subject to comprehensive surveillance agreements.
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■
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the security must be listed on the New York Stock Exchange, the Nasdaq Stock Market, or NYSE Amex Equities U.S.;
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■
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the issuer of the security must be classified, as reasonably determined by NASDAQ OMX, as a company whose primary business is associated with the U.S. housing sector;
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the security must have a market capitalization of at least $60 million;
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■
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the security may not be issued by an issuer currently in bankruptcy proceedings; and
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■
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the issuer of the security may not have annual financial statements with an audit opinion that is currently withdrawn.
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■
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no single Index Security is greater than 25% of the weight of the Index, and the top five Index Securities do not constitute more than 60% of the weight of the Index (measured semi-annually on the first trading day in January and July);
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■
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no more than 18% of the weight of the Index is composed of non-U.S. Index Securities that are not subject to comprehensive surveillance agreements;
|
■
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the total number of Index Securities has not increased or decreased by 33 1/3% of the Index and in no event will be less than nine;
|
■
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Index Securities representing at least 95% of the weight of the Index have a market capitalization of at least $75 million;
|
■
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Index Securities representing at least 92% of the weight of the Index and at least 82% of the total number of Index Securities meet the security options eligibility rules;
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■
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Index Securities must have trading volume of at least 600,000 shares for each of the last six months, except that for each of the lowest weighted Index Securities that in the aggregate account for no more than 5% of the weight of the Index, trading volume must be at least 500,000 shares for each of the last six months; and
|
■
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the lesser of the five highest weighted Index Securities or the highest weighted Index Securities that in the aggregate represent at least 30% of the total number of Index Securities each have had an average monthly trading volume of at least 1,250,000 shares over the past six months.
|
Autocallable Market-Linked Step Up Notes
|
TS-
10
|
Autocallable Market-Linked Step Up Notes
Linked to the PHLX Housing Sector SM Index, due September , 2019 |
|
Autocallable Market-Linked Step Up Notes
|
TS-
11
|
Autocallable Market-Linked Step Up Notes
Linked to the PHLX Housing Sector SM Index, due September , 2019 |
|
Autocallable Market-Linked Step Up Notes
|
TS-
12
|
Autocallable Market-Linked Step Up Notes
Linked to the PHLX Housing Sector SM Index, due September , 2019 |
|
●
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the investor’s spouse (including a domestic partner), siblings, parents, grandparents, spouse’s parents, children and grandchildren, but excluding accounts held by aunts, uncles, cousins, nieces, nephews or any other family relationship not directly above or below the individual investor;
|
●
|
a family investment vehicle, including foundations, limited partnerships and personal holding companies, but only if the beneficial owners of the vehicle consist solely of the investor or members of the investor’s household as described above;
and
|
●
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a trust where the grantors and/or beneficiaries of the trust consist solely of the investor or members of the investor’s household as described above; provided that, purchases of the notes by a trust generally cannot be aggregated together with any purchases made by a trustee’s personal account.
|
Autocallable Market-Linked Step Up Notes
|
TS-
13
|
Autocallable Market-Linked Step Up Notes
Linked to the PHLX Housing Sector SM Index, due September , 2019 |
|
Autocallable Market-Linked Step Up Notes
|
TS-
14
|
Autocallable Market-Linked Step Up Notes
Linked to the PHLX Housing Sector SM Index, due September , 2019 |
|
■
|
There is no statutory, judicial, or administrative authority directly addressing the characterization of the notes.
|
■
|
You agree with us (in the absence of an administrative determination, or judicial ruling to the contrary) to characterize and treat the notes for all tax purposes as a callable single financial contract with respect to the
Index.
|
■
|
Under this characterization and tax treatment of the notes, a U.S. Holder (as defined beginning
on page
50
of the prospectus
) generally will recognize capital gain or loss upon maturity or upon a sale, exchange, or redemption of the notes prior to maturity. This capital gain or loss generally will be long-term capital gain or loss if you held the notes for more than one year.
|
■
|
No assurance can be given that the
IRS
or any court will agree with this characterization and tax treatment.
|
■
|
Under current Internal Revenue Service guidance, withholding on dividend equivalent payments (as discussed in the product supplement), if any, will not apply to notes that are issued as of the date of this pricing supplement unless such notes are delta-one instruments
.
|
Autocallable Market-Linked Step Up Notes
|
TS-
15
|