New BofA Product Offers 1.5x Emerging Markets Exposure With Downside Protection
Rhea-AI Filing Summary
Bank of America has announced new Capped Leveraged Index Return Notes (LIRNs) linked to the MSCI Emerging Markets Index with the following key features:
- Principal Amount: $10.00 per unit with approximately 2-year term
- Return Structure: 1.5-to-1 upside exposure up to a capped value of $12.80-$13.20 (28-32% max return)
- Downside Risk: 1-to-1 exposure to index declines with potential 100% principal loss
- No Interest Payments during the term
Key risks include: credit risk of BofA Finance and BAC as guarantor, capped upside potential, potential principal loss, emerging markets exposure, and impact of Russian securities removal from the index. The initial estimated value will be below the public offering price. Notes will not be exchange-listed and holders have no rights to underlying securities or dividends.
Positive
- Offers 1.5-to-1 leveraged upside exposure to emerging markets growth potential up to a cap of approximately 30%
- Principal protection against market increases, maintaining initial $10 investment value if index stays flat
- Maximum potential return of around 30% (based on capped value of $12.80-$13.20) over two-year term
Negative
- No principal protection with 1-to-1 downside exposure - investors can lose up to 100% of investment
- Upside potential is capped at approximately 30% even if the underlying index performs better
- No dividend payments or interest distributions during the two-year term
- Exposure to emerging markets risks including geopolitical issues (e.g., Russian securities removal impact)
- Credit risk exposure to both BofA Finance and Bank of America Corporation as guarantor
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
What is BAC's new Capped LIRNs investment product linked to?
BAC's new Capped Leveraged Index Return Notes (LIRNs) are linked to the MSCI Emerging Markets Index (Bloomberg symbol: 'MXEF'). The notes have a term of approximately two years and offer 1.5-to-1 upside exposure to increases in the index, subject to a capped value.
What is the maximum return potential for BAC's new Capped LIRNs?
The maximum return is determined by the Capped Value, which will be between $12.80 to $13.20 per unit, representing a potential return of 28.00% to 32.00% over the principal amount. This will be finalized on the pricing date.
What are the main risks of BAC's new Capped LIRNs investment product?
The main risks include: 1) Potential loss of principal with no guaranteed return, 2) Credit risk of both BofA Finance and BAC, 3) Limited investment returns due to the Capped Value, 4) Initial estimated value will be less than public offering price, and 5) Specific risks related to emerging markets investments and the removal of Russian securities from the index.
How does the downside protection work for BAC's new Capped LIRNs?
There is no downside protection for these notes. Investors have 1-to-1 downside exposure to decreases in the MSCI Emerging Markets Index, with up to 100% of the principal amount ($10.00 per unit) at risk if the index performs poorly.
Will BAC's new Capped LIRNs pay any interest or dividends?
No, these Capped LIRNs do not provide any interest payments. Additionally, investors will not be entitled to receive any dividends or other distributions paid on the securities held by the underlying MSCI Emerging Markets Index.
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CAPPED LEVERAGED INDEX RETURN NOTES® (CAPPED LIRNs®)
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Filed Pursuant to Rule 433
Registration No. 333-268718
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Capped LIRNs® Linked to the MSCI Emerging Markets Index
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The graph above and the table below reflect the hypothetical return on the notes, based on the terms contained in the table to the left (using the mid-point for any range(s)). The graph and table have been prepared for purposes of illustration only and do not take into account any tax consequences from investing in the notes.
Hypothetical Percentage Change from the Starting Value to the Ending Value
Hypothetical Redemption Amount per Unit
Hypothetical Total Rate of Return on the Notes
-100.00%
$0.00
-100.00%
-75.00%
$2.50
-75.00%
-50.00%
$5.00
-50.00%
-40.00%
$6.00
-40.00%
-30.00%
$7.00
-30.00%
-20.00%
$8.00
-20.00%
-10.00%
$9.00
-10.00%
-5.00%
$9.50
-5.00%
0.00%(1)
$10.00
0.00%
2.00%
$10.30
3.00%
3.00%
$10.45
4.50%
5.00%
$10.75
7.50%
10.00%
$11.50
15.00%
20.00%
$13.00(2)
30.00%
30.00%
$13.00
30.00%
40.00%
$13.00
30.00%
50.00%
$13.00
30.00%
60.00%
$13.00
30.00%
70.00%
$13.00
30.00%
(1) This hypothetical percentage change corresponds to the Threshold Value.
(2) The Redemption Amount per unit cannot exceed the hypothetical Capped Value
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Issuer
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BofA Finance LLC (“BofA Finance”)
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Guarantor
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Bank of America Corporation (“BAC”)
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Principal Amount
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$10.00 per unit
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Term
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Approximately two years
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Market Measure
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The MSCI Emerging Markets Index (Bloomberg symbol: “MXEF”)
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Payout Profile at Maturity
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1.5-to-1 upside exposure to increases in the Market Measure, subject to the Capped Value
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1-to-1 downside exposure to decreases in the Market Measure, with up to 100.00% of your principal at risk
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Capped Value
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[$12.80 to $13.20] per unit, a [28.00% to 32.00%] return over the principal amount, to be determined on the pricing date.
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Threshold Value
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100% of the Starting Value of the Market Measure
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Interest Payments
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None
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Preliminary Offering Documents
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https://www.sec.gov/Archives/edgar/data/70858/000191870425009947/bofa-34240_424b2.htm
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Exchange Listing
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No
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You should read the relevant Preliminary Offering Documents before you invest. Click on the Preliminary Offering Documents hyperlink above or call your Financial Advisor for a hard copy.
Risk Factors
Please see the Preliminary Offering Documents for a description of certain risks related to this investment, including, but not limited to, the following:
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Depending on the performance of the Market Measure 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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Payments on the notes are subject to the credit risk of BofA Finance and the credit risk of BAC, and actual or perceived changes in the creditworthiness of BofA Finance or BAC are expected to affect the value of the notes. If BofA Finance and BAC become insolvent or are unable to pay their respective obligations, you may lose your entire investment.
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Your investment return is limited to the return represented by the Capped Value and may be less than a comparable investment directly in the Market Measure or the stocks held by the Market Measure.
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The initial estimated value of the notes on the pricing date will be less than their public offering price.
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If you attempt to sell the notes prior to maturity, their market value may be lower than both the public offering price and the initial estimated value of the notes on the pricing date.
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You will have no rights of a holder of the Market Measure or the securities held by the Market Measure, and you will not be entitled to receive securities or dividends or other distributions by the issuers of those securities.
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Your return on the notes and the value of the notes may be affected by exchange rate movements and factors affecting the international securities markets
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An investment in the notes will involve risks associated with investments that are linked to the equity securities of issuers from emerging markets.
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The removal of Russian securities from the Index may have a material adverse effect on the notes.
Final terms will be set on the pricing date within the given range for the specified Market-Linked Investment. Please see the Preliminary Offering Documents for complete product disclosure, including related risks and tax disclosure.
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