Summary
The Accelerated Return Notes
®
Linked to the S&P 500
®
Index, due
July
30
, 2021
(the notes)
are our senior unsecu
red debt securities. Payments on
the notes are fully and un
conditionally guaranteed by BAC
. The notes and the rela
ted guarantee are not insured by the
Federal Deposit Insurance Corporation or secured by collateral.
The notes will rank e
qually with all of BofA Finance’
s other unsecured and unsubordinated debt, and the related guarantee wi
ll rank equally with all of BAC’
s other unsecured and
un
subordinated obligations. Any payments due on the notes, including any repayment of principal, will be subject to the credit risk of BofA Finance, a
s issuer, and BAC, as guarantor
.
The notes provide you a leveraged return, subject to a cap, if the Ending Value of the Market Measure, which is the S&P 500
®
Index (the Index), is greater than its Starting Value. If the Ending Value is less than the Starting Value, you will lose all or a portion of the principal amount of your n
otes. Any payments on the notes
will be calculated based on the $10 principal amount per unit and will depend on the performance of th
e Index, subject to our and BAC’
s credit risk. See Terms of the Notes below.
The
economic terms of the notes (including the
Capped Value
) are based on
BAC’s internal funding rate, which is
the rate
it
would pay to borrow funds through the issuance of market-linked notes and the economic terms of certain related hedging arrangements.
BAC’s internal funding rate
is
typically lower than the rate it would pay when it
issue
s
conventional fixed or floating rate debt securities. This difference in
funding
rate, as well as the underwriting discount and the hedging relat
ed charge described below,
reduce
d
the economic terms of the notes to you and the initial estimated value of the
notes on the pricing date. Due to these factors, the public offering price you pay to purchase the notes will be greater than the initial estimated value of the notes.
On the cover page of this term sheet, we have provided t
he initial estimated value
for the notes. Th
is initial estimated value
was determined based on our
, BAC’s
and our
other
affiliates’ pricing models, which take into consideration
BAC’s
internal funding rate
and the market prices for the hedging arra
ngements related to the notes.
For more information about the initial estimated value and the
structuring of the notes,
see
Structuring the Notes
on page TS-
1
4
.
Terms of the Notes
|
Redemption Amount
Determination
|
Issuer:
|
BofA Finance LLC (BofA Finance)
|
On the maturity date, you will receive a cash payment per unit determined as follows:
|
Guarantor:
|
Bank of America Corporation (BAC)
|
|
Principal Amount
:
|
$10.00 per unit
|
|
Term:
|
Approximately
two years
|
Market Measure:
|
The S&P 500
®
Index (Bloomberg symbol: SPX
), a price return index
|
Starting Value:
|
The lowest closing level of the Market Measure on any Market Measure Business Day (subject to adjustment as set forth in "Other Terms of
the
Notes" on page TS-
7
of this term sheet) during the Starting Value Determination Period.
The closing level of the Market Measure on the pricing date was 3,003.67.
The actual Starting Val
ue will
be made available to investors in the notes after the expiration of the Starting Value Determination Period
.
|
Starting Value Determination Period:
|
The period from and including the pricin
g date to and including August 26,
2019
(or if that day is not a Market Measure Business Day, the immediately following Market Measure Business Day).
|
Ending Value:
|
The average of the closing levels of the Market Measure on each
scheduled
calculation day occurring during the maturity valuation period. The
scheduled
calculation days are subject to postponement in the event of Market Disruption Ev
ents, as described on page PS-19
of product supplement EQUITY INDICES ARN-1.
|
Participation Rate:
|
300%
|
Capped Value:
|
$11.658
per unit
, which represents a return of 16.58%
over the principal amount.
|
Maturity Valuation Period
:
|
July 21, 2021, July 22, 2021, July 23, 2021, July 26, 2021, and July 27, 2021
|
Fees and Charges
:
|
The underwriting discount of $0.20 per unit listed on the cover page and the hedging related charge of $0.075 per unit described in Structuring the Notes on page TS-
1
4
.
|
Calculation Agent
:
|
BofA Securities, Inc.
(
BofAS
), an affiliate of BofA Finance.
|
Accelerated Return Notes
®
|
TS-
2
|
Accelerated Return Notes
®
Linked to the S&P 500
®
Index, due
July 30
, 2021
|
|
The terms and risks of the notes are contained in this term sheet and in the following:
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 supp
lement EQUITY INDICES ARN
-1, prospectus supplement and prospectus, as such references relate to MLPF&S’s institutional services, should be read as references to BofAS.
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 as indicated above or obtained from MLPF&S
or BofAS
by calling 1-800-294-1322. Before you invest, you should read the Note Prospectus, including this term sheet, 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 term sheet have the meanings set forth in product supplement EQUITY INDICES ARN-1. 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
.
Investor Considerations
You may wish to consider an investment in the notes if:
|
The notes may not be an appropriate investment for you if:
|
■
You anticipate that the Index will increase moderately from the Starting Value to the Ending Value.
■
You are willing to risk a loss of principal and return if the Index decreases from the Starting Value to the Ending Value.
■
You accept that the return on the notes will be capped.
■
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 Redemption Amount.
|
■
You believe that the Index will decrease from the Starting Value to the Ending Value or that it will not increase sufficiently over the term of the notes to provide you with your desired return.
■
You seek principal repayment or preservation of capital.
■
You seek an uncapped return on your investment.
■
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 iss
uer of the notes, or to take BAC’
s credit risk, as guarantor of the notes.
|
We urge you to consu
lt your investment, legal, tax,
accounting, and other advisors before you invest in the notes.
Accelerated Return Notes
®
|
TS-
3
|
Accelerated Return Notes
®
Linked to the S&P 500
®
Index, due
July 30
, 2021
|
|
Hypothetical Payout Profile and Examples of Payments at Maturity
Accelerated Return Notes
®
|
This graph reflects the returns on the notes, based on the Participation Rate of 3
00% and the
Capped Value of $
11.658 per unit.
The green line reflects the returns on the notes, while the dotted gray line reflects the returns of a direct investment in the stocks included in the Index, excluding dividends.
This graph has been prepared for purposes of illustration only.
|
The following table and examples are for purposes of illustration only. They are based on
hypothetical
values and show
hypothetical
returns on the notes. They illustrate the calculation of the Redemption Amount and total rate of return based on a hypothetical Starting Value of 100, the Participation Rate o
f 300%, the
Capped Value of $
11.658
per unit and a range of hypothetical Ending Values.
The actual amount you receive and the resulting total rate of return will depend on the actual Starting V
alue, Ending Value,
and whether you hold the notes to maturity.
The following examples do not take into account any tax consequences from investing in the notes.
For recent actual levels of the Market Measure, see The Index section below. The Index is a price return index and as such the Ending Value will not include any income generated by dividends paid on the stocks included in the Index, which you would otherwise be entitled to receive if you invested in those stocks directly. In addition, all payments on the notes are subject to issuer
and guarantor
credit risk.
Accelerated Return Notes
®
|
TS-
4
|
Accelerated Return Notes
®
Linked to the S&P 500
®
Index, due
July 30
, 2021
|
|
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
0
|
-100.00%
|
50.00
|
-50.00%
|
$5.00
0
|
-50.00%
|
80.00
|
-20.00%
|
$8.00
0
|
-20.00%
|
90.00
|
-10.00%
|
$9.00
0
|
-10.00%
|
94.00
|
-6.00%
|
$9.40
0
|
-6.00%
|
97.00
|
-3.00%
|
$9.70
0
|
-3.00%
|
100.00
(1)
|
0.00%
|
$10.00
0
|
0.00%
|
102.00
|
2.00%
|
$10.60
0
|
6.00%
|
103.00
|
3.00%
|
$10.90
0
|
9.00%
|
105.00
|
5.00%
|
$11.50
0
|
15.00%
|
110.00
|
10.00%
|
$11.658
(2)
|
16.58%
|
120.00
|
20.00%
|
$11.658
|
16.58%
|
130.00
|
30.00%
|
$11.658
|
16.58%
|
140.00
|
40.00%
|
$11.658
|
16.58%
|
150.00
|
50.00%
|
$11.658
|
16.58%
|
160.00
|
60.00%
|
$11.658
|
16.58%
|
(1)
|
The
hypothetical
Starting Value of 100 used in these examples has been chosen
for illustrative purposes only. The
actual Starting Value
will be determined after the expiration of the Starting Value Determination Period, and will be less than or equal to 3,003.67, which was the closing level of the Market Measure on the pricing date.
|
(2)
|
The Redemption Amount per unit cannot exceed the Capped Value.
|
Accelerated Return Notes
®
|
TS-
5
|
Accelerated Return Notes
®
Linked to the S&P 500
®
Index, due
July 30
, 2021
|
|
Redemption Amount Calculation Examples
Example 1
|
The Ending Value is 80.00, or 80.00% of the Starting Value:
|
Starting Value:
100.00
|
Ending Value:
80.00
|
|
= $8.00
Redemption Amount per unit
|
Example 2
|
The Ending Value is 103.00, or 103.00% of the Starting Value:
|
Starting Value:
100.00
|
Ending Value:
103.00
|
|
= $10.90
Redemption Amount per unit
|
Example 3
|
The Ending Value is 130.00, or 130.00% of the Starting Value:
|
Starting Value:
100.00
|
Ending Value:
130.00
|
|
= $19.00, however, because the Redemption Amount for the notes cannot exceed the Capped Value, the
Redemption Amount will be $
11.658
per unit
|
Accelerated Return Notes
®
|
TS-
6
|
Accelerated Return Notes
®
Linked to the S&P 500
®
Index, due
July 30
, 2021
|
|
Risk Factors
There are important differences between the notes and a conventional debt security. An investment in the notes involves significant risks, including those listed below. You should carefully review the more detailed explanation of risks relating to the notes in the Risk Factors sections beginning on page PS-6 of product supplement EQUITY INDICES ARN-1, page S-4 of the Series A MTN prospectus supplement, and page 7 of the prospectus identified above. We also urge you to consult your investment, legal, tax, accounting, and other advisors before you invest in the notes.
■
|
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.
|
■
|
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.
|
■
|
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.
|
■
|
Your investment return is limited to the return represented by the Capped Value and may be less than a comparable investment directly in the stocks included in the Index.
|
■
|
We are a finance subsidiary and, as such, will have limited assets and operations.
|
■
|
BAC’s obligations under its guarantee of the notes will be structurally subordinated to liabilities of its subsidiaries.
|
■
|
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.
|
■
|
The initial estimated value of the notes
considers certain assumptions and variables and relies in part on certain forecasts about future events, which may prove to be incorrect. The initial estimated 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.
|
■
|
The public offering p
rice you pay for the notes
exceed
s
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 on page TS-
1
3
. 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,
MLPF&S
, 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
Index
, our
and BAC’s
creditworthiness and changes in market conditions.
|
■
|
A trading market is not expected to develop for the notes.
None of us, BAC,
MLPF&S
or BofAS
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.
|
■
|
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.
|
■
|
The Index sponsor may adjust the Index in a way that affects its level, and has no obligation to consider your interests.
|
■
|
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.
|
■
|
While BAC and our other affiliates may from time to time own securities of companies included in the Index, except to the extent that BAC’s common stock is 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.
|
■
|
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.
|
■
|
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-26 of product supplement EQUITY INDICES ARN-1.
|
Accelerated Return Notes
®
|
TS-
7
|
Accelerated Return Notes
®
Linked to the S&P 500
®
Index, due
July 30
, 2021
|
|
Additional Risk Factor
The Starting Value will be determined after the pricing date of the notes.
The Starting Value of the Market Measure will be determined based on the lowest closing level of the Index during the Starting Value Determination Period. The Starting Value Determination Period will, as described above, end on a day that is approximately
one month
after the pricing date for the notes. As a result, the Starting Value will not be determined, and neither you nor we (nor
BofAS
or any of our respective affiliates) can be certain of what the Starting Value will be, until after the pricing date and the settlement date of the notes.
Occurrence of a Market Disruption Event during the Starting Value Determination Period
If a Market Disruption Event occurs on any Market Measure Business Day during the Starting Value Determination Period (any such day being a Market Disruption Day), the calculation agent will establish the closing level of the Index for such Market Disruption Day as follows:
■
|
The closing level of the Index for the applicable Market Disruption Day will be disregarded, except as set forth below.
|
■
|
Notwithstanding the foregoing, if a Market Disruption Event occurs for three or more consecutive scheduled Market Measure Business Days during the Starting Value Determination Period, then, on the second Market Measure Business Day on which no Market Disruption Event occurs following such Market Disruption Days, the closing level of the Index for each such Market Disruption Day will be determined (or, if not determinable, estimated) by the calculation agent in a manner which the calculation agent considers commercially reasonable under the circumstances.
|
■
|
If a Market Disruption Event occurs on the final date of the Starting Value Determination Period, then the closing level of the Index for that day will be the closing level of the Index on the first scheduled Market Measure Business Day thereafter
, provided that
no Market Disruption Event occurs or is continuing
on that day
.
I
f a Market Disruption Event occurs on the final date of the Starting Value Determination Period and on the first two scheduled Market Measure Business Days thereafter, the calculation agent will determine or, if not determinable, estimate the closing level of the Index as of that final date on the second scheduled Market Measure Business Day after that final date.
|
Accelerated Return Notes
®
|
TS-
8
|
Accelerated Return Notes
®
Linked to the S&P 500
®
Index, due
July 30
, 2021
|
|
The Index
All disclosures contained in this term sheet regarding the Index, includin
g, without limitation, its make-
up, method of calculation, and changes in its components, have been derived from publicly available sources. The information reflects the policies of, and is subject to change by, S&P Dow Jones Indices LLC (the Index sponsor). The Index sponsor, which licenses the copyright and all other rights to the Index, has no obligation to continue to publish, and may discontinue publication of, the Index. The consequences of the Index sponsor discontinuing publication of the Index are discussed in the section of product supplement EQUITY INDICES ARN-1
beginning on page PS-20
entitled Description of ARNs
—
Discontinuance of an Index
.
None of us,
BAC,
the calculation agent, MLPF&S
, or BofAS
accepts any responsibility for the calculation, maintenance or publication of the Index or any successor index.
The Index is intended to provide an indication of the pattern of common stock price movement. The calculation of the level of the Index is based on the relative value of the aggregate market value of the common stocks of 500 companies as of a particular time compared to the aggregate average market value of the common stocks of 500 similar companies during the base period of the years 1941 through 1943.
The
Index includes companies from eleven main groups: Communication Services; Consumer Discretionary; Consumer Staples; Energy; Financials; Health Care; Industrials; Information Technology; Real Estate; Materials; and Utilities. The Index sponsor may from time to time, in its sole discretion, add companies to, or delete companies from, the
Index to achieve the objectives stated above.
The Index sponsor calculates the Index by reference to the prices of the constituent stocks of the Index without taking account of the value of dividends paid on those stocks. As a result, the return on the notes will not reflect the return you would realize if you actually owned the Index constituent stocks and received the dividends paid on those stocks.
Computation of the Index
While the Index sponsor currently employs the following methodology to calculate the Index, no assurance can be given that the Index sponsor will not modify or change this methodology in a manner that may affect the Redemption Amount.
Historically, the market value of any component stock of the Index was calculated as the product of the market price per share and the number of then outstanding shares of such component stock. In March 2005, the Index sponsor began shifting the Index halfway from a market capitalization weighted formula to a float-adjusted formula, before moving the Index to full float adjustment on September 16, 2005. The Index sponsor’s criteria for selecting stocks for the Index did not change with the shift to float adjustment. However, the adjustment affects each company’s weight in the Index.
Under float adjustment, the share counts used in calculating the Index reflect only those shares that are available to investors, not all of a company’s outstanding shares. Float adjustment excludes shares that are closely held by control groups, other publicly traded companies or government agencies.
In September 2012, all shareholdings representing more than 5% of a stock’s outstanding shares, other than holdings by block owners, were removed from the float for purposes of calculating the Index. Generally, these control holders will include officers and directors, private equity, venture capital and special equity firms, other publicly traded companies that hold shares for control, strategic partners, holders of restricted shares, ESOPs, employee and family trusts, foundations associated with the company, holders of unlisted share classes of stock, government entities at all levels (other than government retirement/pension funds) and any individual person who controls a 5% or greater stake in a company as reported in regulatory filings. However, holdings by block owners, such as depositary banks, pension funds, mutual funds and ETF providers, 401(k) plans of the company, government retirement/pension funds, investment funds of insurance companies, asset managers and investment funds, independent foundations and savings and investment plans, will ordinarily be considered part of the float.
Accelerated Return Notes
®
|
TS-
9
|
Accelerated Return Notes
®
Linked to the S&P 500
®
Index, due
July 30
, 2021
|
|
Treasury stock, stock options,
equity participation units, warrants, preferred stock, convertible stock, and rights are not part of the float. Shares held in a trust to allow investors in countries outside the country of domicile, such as depositary shares and Canadian exchangeable shares are normally part of the float unless those shares form a control block. If a company has multiple classes of stock outstanding, shares in an unlisted or non-traded class are treated as a control block.
For each stock, an investable weight factor (IWF) is calculated by dividing the available float shares by the total shares outstanding. Available float shares are defined as the total shares outstanding less shares held by control holders. This calculation is subject to a 5% minimum threshold for control blocks. For example, if a company’s officers and directors hold 3% of the company’s shares, and no other control group holds 5% of the company’s shares, the Index sponsor would assign that company an IWF of 1.00, as no control group meets the 5% threshold. However, if a company’s officers and directors hold 3% of the company’s shares and another control group holds 20% of the company’s shares, the Index sponsor would assign an IWF of 0.77, reflecting the fact that 23% of the company’s outstanding shares are considered to be held for control.
As of July 31, 2017,
companies with multiple
share class lines are no longer eligible for inclusion in the Index
.
Constituents of the Index prior to July 31, 2017 with multiple share class lines will be grandfathered in and continue to be included in the Index. If a constituent company of the Index reorganizes into a multiple share class line structure, that company will remain in the Index at the discretion of the S&P Index Committee in order to minimize turnover
.
The Index is calculated using a base-weighted aggregate methodology. The level of the Index reflects the total market value of all component stocks relative to the base period of the years 1941 through 1943. An indexed number is used to represent the results of this calculation in order to make the level easier to work with and track over time. The actual total market value of the component stocks during the base period of the years 1941 through 1943 has been set to an indexed level of 10. This is often indicated by the notation 1941- 43 = 10. In practice, the daily calculation of the Index is computed by dividing the total market value of the component stocks by the index divisor. By itself, the index divisor is an arbitrary number. However, in the context of the calculation of the Index, it serves as a link to the original base period level of the Index. The index divisor keeps the Index comparable over time and is the manipulation point for all adjustments to the Index, which is index maintenance.
Index Maintenance
Index maintenance includes monitoring and completing the adjustments for company additions and deletions, share changes, stock splits, stock dividends, and stock price adjustments due to company restructuring or spinoffs. Some corporate actions, such as stock splits and stock dividends, require changes in the common shares outstanding and the stock prices of the companies in the Index, and do not require index divisor adjustments.
To prevent the level of the Index from changing due to corporate actions, corporate actions which affect the total market value of the Index require an index divisor adjustment. By adjusting the index divisor for the change in market value, the level of the Index remains constant and does not reflect the corporate actions of individual companies in the Index. Index divisor adjustments are made after the close of trading and after the calculation of the Index closing level.
Changes in a company’s shares outstanding of 5.00% or more due to mergers, acquisitions, public offerings, tender offers, Dutch auctions, or exchange offers are made as soon as reasonably possible.
Share changes due to mergers or acquisitions of publicly held companies that trade on a major exchange are implemented when the transaction occurs, even if both of the companies are not in the same headline index, and regardless of the size of the change.
All other changes of 5.00% or more (due to, for example, company stock repurchases, private placements, redemptions, exercise of options, warrants, conversion of preferred stock, notes, debt, equity participation units, at-the-market offerings, or other recapitalizations) are made weekly and are announced on
Fridays
for implementation after the close of trading on the following
Friday
. Changes of less than 5.00% are accumulated and made quarterly on the third Friday of March, June, September, and December, and are usually announced two to five days prior.
If a c
hange in
a company’s shares outstanding
of
5.00% or
more
causes a company’s IWF to change by
five percentage points
or more, the IWF is updated at the same time
as
the share change. IWF
changes
resulting from partial tender offers
are
considered on a case by case basis
.
Accelerated Return Notes
®
|
TS-
10
|
Accelerated Return Notes
®
Linked to the S&P 500
®
Index, due
July 30
, 2021
|
|
The following graph shows the daily historical performance of the Index in the period from January 1, 20
08 through
July 25
, 2019
. We obtained this historical data from Bloomberg L.P. We have not independently verified the accuracy or completeness of the information obtained f
rom Bloomberg L.P. On
the pricing date
, the closing level of the Index was
3,003.67
.
Historical Performance of the Index
This historical data on the Index is not necessarily indicative of the future performance of the Index or what the value of the notes may be. Any historical upward or downward trend in the level of the Index during any period set forth above is not an indication that the level of the Index is more or less likely to increase or decrease at any time over the term of the notes.
Before investing in the notes, you should consult publicly available sources for the levels of the Index.
Accelerated Return Notes
®
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TS-
11
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Accelerated Return Notes
®
Linked to the S&P 500
®
Index, due
July 30
, 2021
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License Agreement
S&P
®
is a registered trademark of Standard & Poor’s Financial Services LLC (S&P) and Dow Jones
®
is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones). These trademarks have been licensed for use by S&P Dow Jones Indices LLC. Standard & Poor’s
®
, S&P 500
®
and S&P
®
are trademarks of S&P. These trademarks have been sublicensed for certain purposes by our
affiliate
, MLPF&S. The Index is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by
MLPF&S
.
The notes are
not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P or any of their respective affiliates (collectively, S&P Dow Jones Indices). S&P Dow Jones Indices make no representation or warranty, express or implied, to the holders of the
notes
or any member of the public regarding the advisability of investing in securities generally or in
the notes
particularly or the ability of the Index to track general market performance. S&P Dow Jones Indices’ only relationship to
MLPF&S
with respect to the Index
is the licensing of the Index and certain trademarks, service marks and/or trade names of S&P Dow Jones Indices and/or its third party licensors. The Index is determined, composed and calculated by S&P Dow Jones Indices without regard to
us, MLP
F
&S,
BofAS
or the
notes
. S&P Dow Jones Indices have no obligation to take our needs
, BAC’s needs
or the needs of
MLPF&S
or holders of
the notes
into consideration in determining, composing or calculating the Index. S&P Dow Jones Indices are
not responsible for and have not participated in the determination of the prices, and amount of
the notes
or the timing of the issuance or sale of
the notes
or in the determination or calculation of the equation by which
the notes
are to be converted into cash. S&P Dow Jones Indices have no obligation or liability in connection with the administration, marketing or trading of
the notes
. There is no assurance that investment products based on the Index will accurately track index performance or provide positive investment returns. S&P Dow Jones Indices LLC and its subsidiaries are not investment advisors. Inclusion of a security or futures contract within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security or futures contract, nor is it considered to be investment advice. Notwithstanding the foregoing, CME Group Inc. and its affiliates may independently issue and/or sponsor financial products unrelated to
the notes
currently being issued by
us
, but which may be similar to and competitive with
the notes.
In addition, CME Group Inc. and its affiliates may trade financial products which are linked to the performance of the Index.
It is possible that this trading activity will affect the value of
the notes.
S&P DOW JONES INDICES DO NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE INDEX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY US,
BAC,
MLPF&S,
BOFAS,
HOLDERS OF THE
NOTES
, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIB
I
LITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND
MLPF&S,
OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.
Accelerated Return Notes
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TS-
12
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Accelerated Return Notes
®
Linked to the S&P 500
®
Index, due
July 30
, 2021
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Supplement to the Plan of Distribution
; Conflicts of Interest
MLPF&S will purchase the notes from BofAS for resale, and will
receive
a selling concession in connection with the sale of the notes in an amount up to the full amount of underwriting discount set forth on the cover of this term sheet.
MLPF&S and BofAS
,
each
a broker-dealer subsidiary of BAC
,
a
re
member
s
of the Financial Industry Regulatory Authority, Inc. (FINRA) and will participate as selling agent
in the case of BofAS and as dealer in the case of MLPF&S
in the distribution of the notes.
Accordingly, offerings of the notes will conform to the requirements of Rule 5121 applicable to FINRA members.
Neither
MLPF&S nor BofAS
may make sales in this offering to any of its discretionary accounts without the prior written approval of the account holder.
We will
deliver the notes against payment therefor in New York, New York on a date that is greater than
two
business days following the pricing date.
Under Rule 15c6-1 of the Securities Exchange Act of 1934, trades in the secondary market generally are required to settle in
two
business days, unless the parties to any such trade expressly agree otherwise.
Accordingly
, purchasers who wish to trade the notes more than
two
business days prior to the original issue date will be required to specify alternative settlement arrangements to prevent a failed settlement.
The notes will not be listed on any securities exchange.
In the original offering of the notes, the notes will be sold in minimum investment amounts of 100 units.
If you place an order to purchase the notes, you are consenting to MLPF&S
and/or one of its affiliates
acting as a principal in effecting the transaction for your account
.
MLPF&S and BofAS
may repurchase and resell the notes, with repurchases and resales being made at prices related to then-prevailing market prices or at negotiated prices
, and these will
include MLPF&S
’s and BofAS
’s trading commissions and mark-ups
or mark-downs
.
MLPF&S
and BofAS
may act as principal or agent in these market-making transactions; however
,
neither
is obligated to engage in any such transactions.
At their
discretion
,
for a short
,
undetermined
initial period after the issuance of the notes,
MLPF&S and 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
MLPF&S or BofAS
for the notes will be based on then-prevailing market conditions and other considerations, including the performance of the
Index
and the remaining term of the notes.
However, neither we nor any of our
affiliates is obligated to purc
hase your notes at any price, or at any time, and we cannot assure you that we or any of our affiliates will purchase your notes
at a price that
equals or
exceeds the
initial estimated value
of the notes.
The value of the notes shown on your account statement
will be based on
BofAS
’s
estimate of the value of the notes if
BofAS
or another of our affiliates were to make a market in the notes, which it is not obligated t
o do.
That estimate will be based upon the price that
BofAS
may pay
for the notes in light of then-prevailing market conditions
and other considerations, as mentioned above, and will include transaction costs.
At certain times, this price may b
e higher than or lower than the
initial estimated value
of the notes
.
Accelerated Return Notes
®
|
TS-
13
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Accelerated Return Notes
®
Linked to the S&P 500
®
Index, due
July 30
, 2021
|
|
Structuring the Notes
The notes are our debt securities, the return on which is linked to the
performance
of the Index.
The related guarantees are BAC’s obligations.
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 borrow
s
the funds under these
types of
notes at a rate that is more favorable to
BAC
than the rate that
it
might pay for a conventional fixed or floating rate debt security.
This
rate, which we refer to in this term sheet as BAC’s internal funding rate, is typically lower than the rate BAC would pay when it issues conventional fixed or floating rate debt securities.
This ge
nerally 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,
result
ed
in the initial estimated value of the notes on the pricing date being less than their public offering price
.
At maturity, we are required to pay the Redemption Amount to holders of the notes, which will be calculated based on the
performance
of the Index and the $10 per unit
p
rincipal
a
mount
.
In order to meet these payment obligations, 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 by seeking bids from market participants,
including
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 Index, the tenor of the note
s
and the tenor of 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 a hedging related charge of approximately $0.075 per unit, reflecting an estimated profit to be credited to
BofAS
from these transactions. Since hedging entails risk and may be influenced by unpredictable market forces, additional profits and losses from these hedging arrangements may be realized by
BofAS
or any third party hedge providers.
For further information, see
Risk Factors—General Risks Relating to ARNs
beginning on page PS-6 and
Use of Proceeds
on page PS-16
of product supplement EQUITY INDICES ARN-1.
Accelerated Return Notes
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TS-
14
|
Accelerated Return Notes
®
Linked to the S&P 500
®
Index, due
July 30
, 2021
|
|
Summary Tax Consequences
You should consider the U.S. federal income tax consequences of an investment in the notes, including the following:
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There is no statutory, judicial, or administrative authority directly addressing the characterization of the notes.
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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 single financial contract with respect to the
Index.
|
■
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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 or exchange 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.
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No assurance can be given that the
Internal Revenue Service (IRS)
or any court will agree with this characterization and tax treatment.
|
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Under current IRS 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.
|
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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 the U.S. Department of 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. The U.S. Department of Treasury has indicated that taxpayers may rely on these proposed regulations pending their finalization.
|
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.
You should
review carefully the discussion
under the section entitled
U.S. Federal Income Tax Summary beginning on page PS-26 of product supplement EQUITY INDICES ARN-1
.
In addition, any reference to
Morrison & Foerster LLP in the aforementioned tax discussions in product supplement EQUITY INDICES ARN-1 should be read as a reference to Sidley Austin LLP.
Validity of the Notes
In the opinion of McGuireWoods LLP, as counsel to BofA Finance and BAC, when the trustee has made an appropriate entry on Schedule 1 to the Master Registered Global Note dated November 4, 2016 that represents the notes (the Master Note) identifying the notes offered hereby as supplemental obligations thereunder in accordance with the instructions of BofA Finance, and the notes have been delivered against payment therefor as contemplated in this pricing supplement and the related prospectus, prospectus supplement and product supplement, all in accordance with the provisions of the indenture governing the notes and the related guarantee, such notes will be legal, valid and binding obligations of BofA Finance, and the related guarantee will be the legal, valid and binding obligations of BAC, subject, in each case, to the effects of applicable bankruptcy, insolvency (including laws relating to preferences, fraudulent transfers and equitable subordination), reorganization, moratorium and other similar laws affecting creditors’ rights generally, and to general principles of equity. This opinion is given as of the date of this pricing supplement and is limited to the laws of the State of New York and the Delaware Limited Liability Company Act and the Delaware General Corporation Law (including the statutory provisions, all applicable provisions of the Delaware Constitution and reported judicial decisions interpreting the foregoing) as in effect on the date hereof. In addition, this opinion is subject to customary assumptions about the trustee’s authorization, execution and delivery of the indenture governing the notes and due authentication of the Master Note, the validity, binding nature and enforceability of the indenture governing the notes and the related guarantee with respect to the trustee, the legal capacity of individuals, the genuineness of signatures, the authenticity of all documents submitted to McGuireWoods LLP as originals, the conformity to original documents of all documents submitted to McGuireWoods LLP as copies thereof, the authenticity of the originals of such copies and certain factual matters, all as stated in the letter of McGuireWoods LLP dated August 23, 2016, which has been filed as an exhibit to the Registration Statement of BofA Finance and BAC relating to the notes and the related guarantees initially filed with the Securities and Exchange Commission on August 23, 2016.
Sidley Austin LLP, New York, New York, is acting as counsel to BofAS and MLPF&S and as special tax counsel to BofA Finance and BAC.
Accelerated Return Notes
®
|
TS-
15
|
Accelerated Return Notes
®
Linked to the S&P 500
®
Index, due
July 30
, 2021
|
|