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Filed Pursuant
to Rule 424(b)(2)
Registration Statement No. 333-234425
(To Prospectus dated December 31, 2019,
Prospectus Supplement dated December 31, 2019 and
Product Supplement EQUITY LIRN-1 dated January 7,
2020)
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466,839
Units
$10 principal amount per unit
CUSIP No. 06054E101
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Pricing
Date
Settlement Date
Maturity Date
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November
22, 2022
November 30, 2022
November 29, 2024
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BofA
Finance LLC
Capped
Leveraged Index Return Notes® Linked to
the MSCI Emerging Markets Index
Fully
and Unconditionally Guaranteed by Bank of America
Corporation
■
Maturity
of approximately two years
■
2-to-1
upside exposure to increases in the Index, subject to a capped
return of 33.05%
■
1-to-1
downside exposure to decreases in the Index beyond a 10.00%
decline, with up to 90.00% of your principal at risk
■
All
payments occur at maturity and are subject to the credit risk of
BofA Finance LLC, as issuer of the notes, and the credit risk of
Bank of America Corporation, as guarantor of the notes
■
No
periodic interest payments
■
In
addition to the underwriting discount set forth below, the notes
include a hedging-related charge of $0.075 per unit. See
“Structuring the Notes”
■
Limited
secondary market liquidity, with no exchange listing
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The
notes are being issued by BofA Finance LLC (“BofA
Finance”) and are fully and unconditionally guaranteed by
Bank of America Corporation (“BAC”). There are
important differences between the notes and a conventional debt
security, including different investment risks and certain
additional costs. See “Risk Factors” and “Additional Risk
Factors” beginning on page TS-6 of this
term sheet and “Risk Factors” beginning on
page PS-7 of product supplement EQUITY LIRN-1, page
S-5 of the accompanying Series A MTN prospectus
supplement and page 7 of the accompanying
prospectus.
The
initial estimated value of the notes as of the pricing date is
$9.691 per unit, which is less than the public offering
price listed below. See “Summary” on the following page, “Risk
Factors” beginning on page TS-6 of this term sheet and “Structuring
the Notes” beginning on page TS-12 of this term sheet for
additional information. The actual value of your notes at any time
will reflect many factors and cannot be predicted with
accuracy.
_________________________
None
of the Securities and Exchange Commission (the “SEC”), any state
securities commission, or any other regulatory body has approved or
disapproved of these securities or determined if this Note
Prospectus (as defined below) is truthful or complete. Any
representation to the contrary is a criminal offense.
_________________________
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Per
Unit
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Total
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Public
offering price
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$ 10.00
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$4,668,390.00
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Underwriting
discount
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$ 0.20
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$
93,367.80
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Proceeds, before
expenses, to BofA Finance
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$ 9.80
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$4,575,022.20
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The
notes and the related
guarantee:
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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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BofA
Securities
November 22,
2022
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Capped
Leveraged Index Return Notes®
Linked
to the MSCI Emerging Markets Index, due November 29,
2024
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Summary
The
Capped Leveraged Index Return Notes® Linked to the MSCI
Emerging Markets Index, due November 29, 2024 (the “notes”) are our
senior unsecured debt securities. 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 with all of BofA Finance’s other unsecured and
unsubordinated debt, and the related guarantee will rank equally
with all of BAC’s other unsecured and unsubordinated
obligations, in each case, subject to any priorities or
preferences by law. Any payments due on the notes, including
any repayment of principal, will be subject to the credit risk of
BofA Finance, as 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 MSCI Emerging Markets
Index (the “Index”), is greater than its Starting Value. If the
Ending Value of the Market Measure, is equal to or less than the
Starting Value but greater than or equal to the Threshold Value,
you will receive the principal amount of your notes. If the Ending
Value is less than the Threshold Value, you will lose a portion,
which could be significant, of the principal amount of your notes.
Any payments on the notes will be calculated based on the $10
principal amount per unit and will depend on the performance of
the 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 issues conventional fixed or floating rate debt securities.
This difference in funding rate, as well as the underwriting
discount and the hedging-related charge described below, reduced
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 are paying to purchase the notes is
greater than the initial estimated value of the notes.
On the
cover page of this term sheet, we have provided the initial
estimated value for the notes. This initial estimated range 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 arrangements 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-12.
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Terms
of the Notes
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Redemption
Amount Determination
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Issuer:
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BofA
Finance LLC (“BofA Finance”)
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On the
maturity date, you will receive a cash payment per unit determined
as follows:
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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”), a
price return index
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Starting Value:
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927.41
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Ending Value:
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The
average of the closing levels of the Market Measure on each
calculation day occurring during the Maturity Valuation Period. The
scheduled calculation days are subject to postponement in the event
of Market Disruption Events, as described beginning on page PS-25
of product supplement EQUITY LIRN-1.
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Threshold Value:
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834.67, which is
90.00% of the Starting Value (rounded to two decimal
places).
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Participation Rate:
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200%
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Capped Value:
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$13.305 per
unit, which represents a return of 33.05% over the principal
amount.
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Maturity Valuation Period:
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November 20,
2024, November 21, 2024, November 22, 2024, November 25, 2024 and
November 26, 2024.
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Fees and Charges:
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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” beginning on page TS-12.
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Calculation Agent:
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BofA
Securities Inc. (“BofAS”), an affiliate of BofA
Finance.
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Capped
Leveraged Index Return Notes®
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TS-2
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Capped
Leveraged Index Return Notes®
Linked
to the MSCI Emerging Markets Index, due November 29,
2024
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The
terms and risks of the notes are contained in this term sheet and
in the following:
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
Merrill Lynch, Pierce, Fenner & Smith Incorporated
(“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 the accompanying product 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.
Investor
Considerations
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You
may wish to consider an investment in the notes
if:
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The
notes may not be an appropriate investment for you
if:
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■
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 that is below the Threshold
Value.
■
You accept that
the return on the notes will be capped.
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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.
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■
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.
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You seek
100% principal repayment or preservation of
capital.
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You seek an
uncapped return on your investment.
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You seek interest
payments or other current income on your investment.
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You want to
receive dividends or other distributions paid on the stocks
included in the Index.
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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.
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We
urge you to consult your investment, legal, tax, accounting, and
other advisors before you invest in the notes.
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Capped
Leveraged Index Return Notes®
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TS-3
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Capped
Leveraged Index Return Notes®
Linked
to the MSCI Emerging Markets Index, due November 29,
2024
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Hypothetical
Payout Profile and Examples of Payments at Maturity
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Capped
Leveraged Index Return Notes®
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This
graph reflects the returns on the notes, based on the Participation
Rate of 200%, the Threshold Value of 90% of the Starting Value and
the Capped Value of $13.305 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.
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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, a hypothetical Threshold
Value of 90, the Participation Rate of 200%, the Capped Value of
$13.305 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 Value, Threshold Value,
and 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.
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Ending
Value
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Percentage
Change from the Starting Value to the Ending Value
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Redemption
Amount per Unit
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Total Rate of
Return on the Notes
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0.00
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-100.00%
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$1.00
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-90.00%
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50.00
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-50.00%
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$6.00
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-40.00%
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80.00
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-20.00%
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$9.00
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-10.00%
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90.00(1)
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-10.00%
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$10.00
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0.00%
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94.00
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-6.00%
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$10.00
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0.00%
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95.00
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-5.00%
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$10.00
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0.00%
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97.00
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-3.00%
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$10.00
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0.00%
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100.00(2)
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0.00%
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$10.00
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0.00%
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102.00
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2.00%
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$10.40
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4.00%
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103.00
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3.00%
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$10.60
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6.00%
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105.00
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5.00%
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$11.00
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10.00%
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110.00
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10.00%
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$12.00
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20.00%
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116.53
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16.53%
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$13.305(3)
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33.05%
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120.00
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20.00%
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$13.305
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33.05%
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130.00
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30.00%
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$13.305
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33.05%
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140.00
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40.00%
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$13.305
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33.05%
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150.00
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50.00%
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$13.305
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33.05%
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160.00
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60.00%
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$13.305
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33.05%
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(1)
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This
is the hypothetical Threshold Value.
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(2)
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The
hypothetical Starting Value of 100 used in these examples
has been chosen for illustrative purposes only. The actual Starting
Value is 927.41, which was the closing level of the Market Measure
on the pricing date.
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(3)
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The
Redemption Amount per unit cannot exceed the Capped
Value.
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Capped
Leveraged Index Return Notes®
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TS-4
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Capped
Leveraged Index Return Notes®
Linked
to the MSCI Emerging Markets Index, due November 29,
2024
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Redemption
Amount Calculation Examples
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Example
1
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The
Ending Value is 80.00, or 90.00% of the Starting
Value:
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Starting
Value: 100.00
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Threshold
Value: 90.00
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Ending
Value: 80.00
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Redemption
Amount per unit
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Example
2
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The
Ending Value is 97.00, or 97.00% of the Starting
Value:
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Starting
Value: 100.00
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Threshold
Value: 90.00
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Ending
Value: 97.00
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Redemption Amount
(per unit) = $10.00, the principal amount, since the
Ending Value is less than the Starting Value but equal to or
greater than the Threshold Value.
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Example 3
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The
Ending Value is 103.00, or 103.00% of the Starting
Value:
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Starting
Value: 100.00
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Ending
Value: 103.00
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=
$10.60 Redemption Amount per unit
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Example 4
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The
Ending Value is 140.00, or 140.00% of the Starting
Value:
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Starting
Value: 100.00
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Ending
Value: 140.00
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=
$18.00, however, because the Redemption Amount for
the notes cannot exceed the Capped Value, the Redemption
Amount will be
$13.305 per
unit
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Capped
Leveraged Index Return Notes®
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TS-5
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Capped
Leveraged Index Return Notes®
Linked
to the MSCI Emerging Markets Index, due November 29,
2024
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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-7 of the accompanying
product supplement EQUITY LIRN-1, page S-5 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.
Structure-related
Risks
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■
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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 any 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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Your
investment return is limited to the amount represented by the
Capped Value and 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, have no independent assets,
operations or revenues.
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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; and 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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Valuation-
and Market-related Risks
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■
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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 the
pricing date 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 are paying for the notes exceeds 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-12. 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 your 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 the notes at any price in any secondary
market.
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Conflict-related
Risks
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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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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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Market
Measure-related Risks
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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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■
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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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■
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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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Capped
Leveraged Index Return Notes®
|
TS-6
|
|
Capped
Leveraged Index Return Notes®
Linked
to the MSCI Emerging Markets Index, due November 29,
2024
|
|
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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, specifically changes in the countries
represented by the Index. In addition, you will not obtain the
benefit of any increase in the value of the relevant currencies
against the U.S. dollar, which you would have received if you had
owned the securities represented by the Index during the term of
your notes, although the levels of the Index may be adversely
affected by general exchange rate movements in the
market.
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Tax-related
Risks
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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-38 of product supplement EQUITY
LIRN-1.
|
Additional
Risk Factors
There are risks
associated with emerging markets.
An
investment in the notes will involve risks not generally associated
with investments which have no emerging market component. In
particular, many emerging nations are undergoing rapid change,
involving the restructuring of economic, political, financial and
legal systems. Regulatory and tax environments may be subject
to change without review or appeal. Many emerging
markets suffer from underdevelopment of capital markets and tax
regulation. The risk of expropriation and nationalization
remains a threat. Guarding against such risks is made more
difficult by low levels of corporate disclosure and unreliability
of economic and financial data.
The
removal of Russian securities from the Index may have
a material adverse effect on the
notes.
On
March 2, 2022, after the conclusion of a consultation on the
appropriate treatment of the Russian equity market within its
indices, the MSCI Inc. (“MSCI”), the index sponsor of the MSCI
Emerging Markets Index, announced that it would remove Russian
securities from the Index, effective after the close on March 9,
2022. We cannot predict the ongoing effects of that removal on the
level of the Index. The historical performance of the Index prior
to March 9, 2022 reflects the inclusion of Russian securities,
while results thereafter do not include Russian securities and may
differ materially from how the Index would have performed if
Russian securities had not been removed.
Other
Terms of the Notes
Market Measure
Business Day
The
following definition shall supersede and replace the definition of
a “Market Measure Business Day” set forth in product supplement
EQUITY LIRN-1:
A
“Market Measure Business Day” means a day on
which:
(A) each of the London Stock Exchange, the Hong Kong Stock
Exchange, the São Paulo Stock Exchange, and the Korea Stock
Exchange (or any successor to the foregoing exchanges) are
open for trading; and
(B) the Index or any successor thereto is calculated and
published.
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Capped
Leveraged Index Return Notes®
|
TS-7
|
|
Capped
Leveraged Index Return Notes®
Linked
to the MSCI Emerging Markets Index, due November 29,
2024
|
|
The Index
All
disclosures contained in this term sheet regarding the Index,
including, 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, MSCI (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 entitled “Description of
LIRNs—Discontinuance of an Index” on page PS-29 of product
supplement EQUITY LIRN-1. 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 MSCI
Emerging Markets Index
The
MXEF is intended to measure equity market performance in the global
emerging markets. The MXEF is a free float--adjusted market
capitalization index with a base date of December 31, 1987 and an
initial value of 100. The MXEF is calculated daily in U.S. dollars
and published in real time every 60 seconds during market trading
hours. The MXEF has a base value of 100.00 and a base date of
December 31, 1987. As of October 31, 2022, the MXEF consists of the
following 24 emerging market country indices: Brazil, Chile, China,
Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia,
Korea, Kuwait, Malaysia, Mexico, Peru, Philippines, Poland, Qatar,
Saudi Arabia, South Africa, Taiwan, Thailand, Turkey and United
Arab Emirates. The MXEF is an “MSCI Index.”
The
Country Indices
Each
country’s index included in an MSCI Index is referred to as a
“Country Index.” Under the MSCI methodology, each Country Index is
an “MSCI Global Standard Index.” The components of each Country
Index used to be selected by the index sponsor from among the
universe of securities eligible for inclusion in the relevant
Country Index so as to target an 85% free float-adjusted market
representation level within each of a number of industry groups,
subject to adjustments to (i) provide for sufficient liquidity,
(ii) reflect foreign investment restrictions (only those securities
that can be held by non-residents of the country corresponding to
the relevant Country Index are included) and (iii) meet certain
other investibility criteria. Following a change in the index
sponsor’s methodology implemented in May 2008, the 85% target is
now measured at the level of the country universe of eligible
securities rather than the industry group level-so each Country
Index will seek to include the securities that represent 85% of the
free float-adjusted market capitalization of all securities
eligible for inclusion, but will still be subject to liquidity,
foreign investment restrictions and other investibility
adjustments. The index sponsor defines “free float” as total
shares excluding shares held by strategic investors such as
governments, corporations, controlling shareholders and management,
and shares subject to foreign ownership restrictions.
Calculation
of the Country Indices
Each
Country Index is a free float-adjusted market capitalization index
that is designed to measure the market performance, including price
performance, of the equity securities in that country. Each Country
Index is calculated in the relevant local currency as well as in
U.S. dollars, with price, gross and net returns.
Each
component is included in the relevant Country Index at a weight
that reflects the ratio of its free float-adjusted market
capitalization (i.e., free public float multiplied by price)
to the free float-adjusted market capitalization of all the
components in that Country Index. The index sponsor defines the
free float of a security as the proportion of shares outstanding
that is deemed to be available for purchase in the public equity
markets by international investors.
Calculation of
the MSCI Indices
The
performance of a MSCI Index on any given day represents the
weighted performance of all of the components included in all of
the Country Indices. Each component in a MSCI Index is included at
a weight that reflects the ratio of its free float-adjusted market
capitalization (i.e., free public float multiplied by price)
to the free float-adjusted market capitalization of all the
components included in all of the Country Indices.
Maintenance of
and Changes to the MSCI Indices
The
index sponsor maintains the MSCI Indices with the objective of
reflecting, on a timely basis, the evolution of the underlying
equity markets and segments. In maintaining the indices, emphasis
is also placed on continuity, continuous investibility of the
constituents, replicability, index stability and low turnover in
the indices.
As
part of the changes to the index sponsor’s methodology which became
effective in May 2008, maintenance of the indices falls into three
broad categories:
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semi-annual
reviews, which will occur each May and November and will involve a
comprehensive reevaluation of the market, the universe of eligible
securities and other factors involved in composing the
indices;
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quarterly reviews,
which will occur each February, May, August and November and will
focus on significant changes in the market since the last
semi-annual review and on including significant new eligible
securities (such as IPOs, which were not eligible for earlier
inclusion in the indices); and
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ongoing
event-related changes, which will generally be reflected in the
indices at the time of the event and will include changes resulting
from mergers, acquisitions, spin-offs, bankruptcies,
reorganizations and other similar corporate
events.
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Based
on these reviews, additional components may be added, and current
components may be removed, at any time. The index sponsor generally
announces all changes resulting from semi-annual reviews, quarterly
reviews and ongoing events in advance of their implementation,
although in exceptional cases they may be announced during market
hours for same or next day implementation.
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Capped
Leveraged Index Return Notes®
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TS-8
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Capped
Leveraged Index Return Notes®
Linked
to the MSCI Emerging Markets Index, due November 29,
2024
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Neither we nor any
of our affiliates, MLPF&S or BofAS, accepts any
responsibility for the calculation, maintenance, or publication of,
or for any error, omission, or disruption in, the MSCI Indices. The
index sponsor does not guarantee the accuracy or the completeness
of the MSCI Indices or any data included in the MSCI Indices. The
index sponsor assumes no liability for any errors, omissions, or
disruption in the calculation and dissemination of the MSCI
Indices. The index sponsor disclaims all responsibility for any
errors or omissions in the calculation and dissemination of the
MSCI Indices or the manner in which the MSCI Indices is applied in
determining the amount payable on the notes at
maturity.
Prices and
Exchange Rates
Prices
The
prices used to calculate the MSCI Indices are the official exchange
closing prices or those figures accepted as such. The index sponsor
reserves the right to use an alternative pricing source on any
given day.
Exchange
Rates
The
index sponsor uses the closing spot rates published by WM / Reuters
at 4:00 p.m., London time. The index sponsor uses WM / Reuters
rates for all countries for which it provides indices.
In
case WM/Reuters does not provide rates for specific markets on
given days (for example Christmas Day and New Year’s Day), the
previous business day’s rates are normally used. The index sponsor
independently monitors the exchange rates on all its indices and
may, under exceptional circumstances, elect to use an alternative
exchange rate if the WM / Reuters rates are not available, or if
the index sponsor determines that the WM / Reuters rates are not
reflective of market circumstances for a given currency on a
particular day. In such circumstances, an announcement would be
sent to clients with the related information. If appropriate, the
index sponsor may conduct a consultation with the investment
community to gather feedback on the most relevant exchange
rate.
The
following graph shows the daily historical performance of the Index
in the period from January 1, 2012
through November 22,
2022. 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.
On the pricing date, the closing level
of the Index
was 927.41.
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.
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Capped
Leveraged Index Return Notes®
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TS-9
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Capped
Leveraged Index Return Notes®
Linked
to the MSCI Emerging Markets Index, due November 29,
2024
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License
Agreement
Our
affiliate, MLPF&S, has entered into a non-exclusive license
agreement with MSCI whereby MLPF&S and certain of its
affiliates, in exchange for a fee, are permitted to use the MSCI
indices in connection with certain securities, including the notes.
We are not affiliated with MSCI, the only relationship between MSCI
and us is any licensing of the use of MSCI’s indices and trademarks
relating to them.
The
license agreement provides that the following language must be set
forth herein:
THE
NOTES ARE NOT SPONSORED, ENDORSED, SOLD, OR PROMOTED BY MSCI, ANY
OF ITS AFFILIATES, ANY OF ITS INFORMATION PROVIDERS, OR ANY OTHER
THIRD PARTY INVOLVED IN, OR RELATED TO, COMPILING, COMPUTING, OR
CREATING THE MXEF INDEX (COLLECTIVELY, THE “MSCI PARTIES”). THE
MXEF INDEX IS THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MXEF
INDEX ARE SERVICE MARKS OF MSCI OR ITS AFFILIATES AND HAVE BEEN
LICENSED TO US FOR USE FOR CERTAIN PURPOSES. THE NOTES HAVE NOT
BEEN PASSED ON BY ANY OF THE MSCI PARTIES AS TO THEIR LEGALITY OR
SUITABILITY WITH RESPECT TO ANY PERSON OR ENTITY AND NONE OF THE
MSCI PARTIES MAKES ANY WARRANTIES OR BEARS ANY LIABILITY WITH
RESPECT TO THE NOTES. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, NONE OF THE MSCI PARTIES MAKES ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, TO US OR OWNERS OF THE NOTES OR ANY
OTHER PERSON OR ENTITY REGARDING THE ADVISABILITY OF INVESTING IN
ANY SECURITIES GENERALLY OR IN THIS OFFERING PARTICULARLY OR THE
ABILITY OF ANY MSCI INDEX TO TRACK CORRESPONDING STOCK MARKET
PERFORMANCE. MSCI OR ITS AFFILIATES ARE THE LICENSORS OF CERTAIN
TRADEMARKS, SERVICE MARKS, AND TRADE NAMES OF THE MXEF INDEX, WHICH
ARE DETERMINED, COMPOSED, AND CALCULATED BY MSCI WITHOUT REGARD TO
THE NOTES, TO US, TO THE OWNERS OF THE NOTES, OR TO ANY OTHER
PERSON OR ENTITY. NONE OF THE MSCI PARTIES HAS ANY OBLIGATION TO
TAKE THE NEEDS OF US OR OWNERS OF THE NOTES OR ANY OTHER PERSON OR
ENTITY INTO CONSIDERATION IN DETERMINING, COMPOSING, OR CALCULATING
THE MXEF INDEX. NONE OF THE MSCI PARTIES IS RESPONSIBLE FOR OR
HAS PARTICIPATED IN THE DETERMINATION OF THE TIMING OF, PRICES AT,
OR QUANTITIES OF THE NOTES TO BE ISSUED OR IN THE DETERMINATION OR
CALCULATION OF THE AMOUNT THAT MAY BE PAID AT MATURITY ON THE
NOTES. NONE OF THE MSCI PARTIES HAS ANY OBLIGATION OR LIABILITY TO
US OR TO OWNERS OF THE NOTES OR ANY OTHER PERSON OR ENTITY IN
CONNECTION WITH THE ADMINISTRATION, MARKETING OR, OFFERING OF THE
NOTES.
No
purchaser, seller or holder of the notes, or any other person or
entity, should use or refer to any MSCI trade name, trademark or
service mark to sponsor, endorse, market or promote the notes
without first contacting MSCI to determine whether MSCI’s
permission is required. Under no circumstances may any person or
entity claim any affiliation with MSCI without the prior written
permission of MSCI.
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Capped
Leveraged Index Return Notes®
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TS-10
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Capped
Leveraged Index Return Notes®
Linked
to the MSCI Emerging Markets Index, due November 29,
2024
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Supplement
to the Plan of Distribution; Conflicts of Interest
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 term sheet, less the indicated underwriting
discount.
MLPF&S
will purchase the notes from BofAS for resale, and it 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,are members 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
BofAS nor MLPF&S 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 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 purchase 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 to 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 be
higher than or lower than the initial estimated value of the
notes.
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Capped
Leveraged Index Return Notes®
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TS-11
|
|
Capped
Leveraged Index Return Notes®
Linked
to the MSCI Emerging Markets Index, due November 29,
2024
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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 borrows 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 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, resulted 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 principal amount. 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
MLPF&S 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 notes 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 $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
LIRNs” beginning on page PS-7 and “Use of Proceeds” on page PS-22
of the accompanying product supplement EQUITY
LIRN-1.
Validity
of the Notes
In the
opinion of McGuireWoods LLP, as counsel to BofA Finance and BAC,
when the trustee has made the appropriate entries or notations on
the applicable schedule to the master global note 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 provisions of the indenture
governing the notes and the related guarantee, and the notes have
been delivered against payment therefor as contemplated in this
term sheet and the related prospectus, prospectus supplement and
product supplement, such notes will be the legal, valid and binding
obligations of BofA Finance, and the related guarantee will be the
legal, valid and binding obligation 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 term sheet 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 December 30, 2019, which has been filed as
an exhibit to Pre-Effective Amendment No. 1 to the Registration
Statement (File No. 333-234425) of BofA Finance and BAC, filed with
the SEC on December 30, 2019.
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.
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Capped
Leveraged Index Return Notes®
|
TS-12
|
|
Capped
Leveraged Index Return Notes®
Linked
to the MSCI Emerging Markets Index, due November 29,
2024
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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 38 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 term sheet
unless such notes are “delta-one” instruments.
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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-38 of product supplement EQUITY
LIRN-1.
Where
You Can Find More Information
We and
BAC have filed a registration statement (including a product
supplement, a prospectus supplement and a prospectus) with the SEC
for the offering to which this term sheet relates. Before you
invest, you should read the Note Prospectus, including this term
sheet, and the other documents relating to this offering that we
and BAC have filed with the SEC, for more complete information
about us, BAC and this offering. You may get these documents
without cost by visiting EDGAR on the SEC website at www.sec.gov.
Alternatively, we, any agent or any dealer participating in this
offering will arrange to send you these documents if you so request
by calling MLPF&S or BofAS toll-free at
1-800-294-1322.
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Capped
Leveraged Index Return Notes®
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TS-13
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Bank of America (NYSE:BAC)
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