Bank of America Announces Redemptions of Floating Rate Senior Notes Due February 2025 and 1.843% Fixed/Floating Rate Senior Notes Due February 2025

Rhea-AI Summary

Bank of America Corporation announced the redemption of all outstanding Floating Rate Senior Notes and Fixed/Floating Rate Senior Notes, due February 2025, totaling $2.5 billion. The redemption price for each series of notes, along with accrued and unpaid interest, will be paid on February 5, 2024. Bank of America is a leading financial institution with a wide range of banking, investing, and asset management services, serving millions of clients globally.

Financial Analyst

The early redemption of Bank of America's Floating Rate and Fixed/Floating Rate Senior Notes is a strategic financial decision that warrants a closer examination. This move suggests a proactive approach to debt management, likely driven by an analysis of the current interest rate environment and the bank's capital structure. By redeeming these notes before maturity, the bank may be aiming to reduce its interest expenses or to refinance the debt at a more favorable rate, given the possibility of fluctuating interest rates in the near future.

Investors and analysts should assess the impact of this redemption on the bank's financial health. It is crucial to consider the effects on the bank's net interest margin, as well as the potential changes in leverage ratios. The redemption could signal confidence in the bank's liquidity and balance sheet strength, which might be interpreted positively by the market. However, it is also essential to scrutinize the bank's future borrowing costs and the availability of capital for further investments or loan growth.

Debt Market Analyst

From a debt market perspective, the redemption of notes can influence the supply and demand dynamics for Bank of America's securities. The removal of these notes from the market decreases the total outstanding debt, which could potentially lead to a tightening of the bank's credit spread over comparable maturities. This action may also be indicative of the bank's expectations regarding future interest rate movements.

Furthermore, the redemption terms, specifically the 100% principal payment plus accrued interest, are standard, but it is important to evaluate the opportunity cost for investors who are being 'called' out of their investment. They will need to find alternative investments that provide a similar risk-return profile. For the bank, the cost associated with this redemption, including any potential call premiums and transaction fees, must be weighed against the benefits of retiring the debt.

Market Research Analyst

Analyzing the broader market implications, Bank of America's redemption decision can reflect broader economic conditions and the bank's strategic positioning. If the redemption is part of a larger trend among financial institutions managing their interest rate exposure, it could signal an industry-wide shift in capital management strategies, potentially influencing the financial sector's performance. Market participants will be interested in how this redemption aligns with the bank's long-term financial strategy and whether it is a response to regulatory changes, shifts in the competitive landscape, or internal targets for capital ratios.

Additionally, the bank's actions may be scrutinized for their alignment with investor expectations and corporate governance standards. Any deviation from these could affect investor sentiment and, ultimately, the stock performance of Bank of America. The market will also look for any subsequent announcements regarding the redeployment of capital or changes in dividend and share repurchase policies as a result of the freed-up capital from the redemption.

CHARLOTTE, N.C., Jan. 26, 2024 /PRNewswire/ -- Bank of America Corporation announced today that it will redeem on February 4, 2024 all $750,000,000 principal amount outstanding of its Floating Rate Senior Notes, due February 2025 (CUSIP No. 06051GKF5) (the "Floating Rate Notes"), and all $1,750,000,000 principal amount outstanding of its 1.843% Fixed/Floating Rate Senior Notes, due February 2025 (CUSIP No. 06051GKG3) (the "Fixed/Floating Rate Notes" and, together with the Floating Rate Notes, the "Notes"). Since February 4, 2024 is not a business day, the redemption price for each series of the Notes, together with accrued and unpaid interest, will be paid on the next succeeding business day, February 5, 2024.

The redemption price for the Floating Rate Notes will be equal to 100% of the principal amount of such series, plus accrued and unpaid interest to, but excluding, February 5, 2024. The redemption price for the Fixed/Floating Rate Notes will be equal to 100% of the principal amount of such series, plus accrued and unpaid interest to, but excluding, February 4, 2024.

Payment of the redemption price for the Notes will be made through the facilities of The Depository Trust Company. The Bank of New York Mellon Trust Company, N.A. is the trustee and paying agent for the Notes.

Bank of America

Bank of America is one of the world's leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 69 million consumer and small business clients with approximately 3,800 retail financial centers, approximately 15,000 ATMs (automated teller machines) and award-winning digital banking with approximately 57 million verified digital users.  Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 4 million small business households through a suite of innovative, easy-to-use online products and services.  The company serves clients through operations across the United States, its territories and more than 35 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.

Forward-looking statements

Certain information contained in this news release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future results or performance and involve certain risks, uncertainties and assumptions difficult to predict or beyond our control. You should not place undue reliance on any forward-looking statement and should consider the uncertainties and risks discussed under Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2022, and in any of our subsequent Securities and Exchange Commission filings.  Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update any forward-looking statement to reflect the impact of circumstances or events that arise after the date the forward-looking statement was made.

For more Bank of America news, including dividend announcements and other important information, visit the Bank of America newsroom and register for news email alerts.

www.bankofamerica.com

Investors May Contact:

Lee McEntire, Bank of America
Phone:  1.980.388.6780
lee.mcentire@bofa.com

Jonathan G. Blum, Bank of America (Fixed Income)
Phone: 1.212.449.3112
jonathan.blum@bofa.com

Reporters May Contact:

Bill Halldin, Bank of America
Phone: 1.916.724.0093
william.halldin@bofa.com

Christopher P. Feeney, Bank of America
Phone: 1.980.386.6794
christopher.feeney@bofa.com

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SOURCE Bank of America Corporation

FAQ

What is the total amount of outstanding notes being redeemed by Bank of America?

Bank of America is redeeming all $750,000,000 principal amount outstanding of its Floating Rate Senior Notes and all $1,750,000,000 principal amount outstanding of its Fixed/Floating Rate Senior Notes, totaling $2.5 billion.

When will the redemption of the notes take place?

The redemption of the notes will take place on February 4, 2024, and the redemption price, along with accrued and unpaid interest, will be paid on February 5, 2024.

What is the business focus of Bank of America?

Bank of America is focused on serving individual consumers, small and middle-market businesses, large corporations, and providing a full range of banking, investing, asset management, and other financial and risk management products and services.

Where is Bank of America listed?

Bank of America Corporation stock is listed on the New York Stock Exchange under the ticker symbol BAC.