This pricing supplement, which is not complete and may
be changed, relates to an effective Registration Statement under the Securities Act of 1933. This pricing supplement and the accompanying
product supplement, prospectus supplement and prospectus are not an offer to sell these Notes in any country or jurisdiction where
such an offer would not be permitted.
Linked to the Least Performing
of the S&P 500® Index, the EURO STOXX 50® Index and the Russell 2000® Index
|
•
|
Approximate
6 year term if not called prior to maturity.
|
|
•
|
Payments
on the Notes will depend on the individual performance of the S&P 500® Index, the EURO STOXX 50® Index and the Russell
2000® Index (each an “Underlying”).
|
|
•
|
Contingent
coupon rate of 6.50% per annum (1.625% per quarter) payable quarterly if the closing level of
each
Underlying on the applicable
Observation Date is greater than or equal to 60% of its Starting Value.
|
|
•
|
Beginning
in July 2021, automatically callable quarterly for an amount equal to the principal amount plus the relevant contingent coupon
if the closing level of
each
Underlying is greater than or equal to its Starting Value on any Observation Date (other than
the final Observation Date).
|
|
•
|
Assuming
the Notes are not called prior to maturity, if
any
Underlying declines by more than 40% from its Starting Value, at maturity,
the investor will receive a 1:1 downside, with up to 100% of the principal at risk; otherwise, investors will receive the principal
amount and, if payable, the applicable contingent coupon.
|
|
•
|
All
payments on the Notes are subject to the credit risk of BofA Finance LLC (“BofA Finance”) and Bank of America Corporation
(“BAC” or the “Guarantor”).
|
|
•
|
The
Notes are expected to price on July 25, 2019, expected to issue on July 30, 2019 and expected to mature on July 30, 2025. The Notes
will not be listed on any securities exchange.
|
The initial estimated value
of the Notes as of the pricing date is expected to be between $960 and $990 per Note, which is less than the public offering price
listed below.
The actual value of your Notes at any time will reflect many factors and cannot be predicted with accuracy. See
“Risk Factors” beginning on page PS-8 of this pricing supplement and “Structuring the Notes” on page PS-20
of this pricing supplement for additional information. Potential purchasers of the Notes should consider the information in “Risk
Factors” beginning on page PS-8 of this pricing supplement, page PS-5 of the accompanying product supplement, page S-4 of
the accompanying prospectus supplement, and page 7 of the accompanying prospectus.
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 on page PS-25) is truthful or complete. Any representation to
the contrary is a criminal offense.
|
Public offering price
(1)
|
Underwriting discount
(1)
|
Proceeds, before expenses, to BofA Finance
|
Per Note
|
$1,000
|
$2.50
|
$997.50
|
Total
|
|
|
|
|
(1)
|
Certain
dealers who purchase the Notes for sale to certain fee-based advisory accounts may forgo some or all of their selling concessions,
fees or commissions.
|
The
public offering price for investors purchasing the Notes in these fee-based advisory accounts may be as low as $997.50 per Note.
|
(2)
|
In addition to the
underwriting discount above, if any, an affiliate of BofA Finance will pay a referral fee of up to $6.00 per $1,000 in principal
amount of the Notes in connection with the distribution of the Notes to other registered broker-dealers.
|
The Notes and the related
guarantee:
Are Not FDIC Insured
|
Are Not Bank Guaranteed
|
May Lose Value
|
Selling Agent
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the S&P 500® Index, the EURO STOXX 50® Index and the Russell 2000
®
Index
Terms of the Notes
The Contingent
Income Auto-Callable Yield Notes Linked to the Least Performing of the S&P 500® Index, the EURO STOXX 50® Index and
the Russell 2000® Index (the “Notes”) provide a quarterly Contingent Coupon Payment of $16.25 on the applicable
Contingent Payment Date if, on any quarterly Observation Date, the Observation Value of
each
Underlying is greater than
or equal to its Coupon Barrier. Beginning in July 2021, if the Observation Value of
each
Underlying is greater than or equal
to its Starting Value on any Observation Date (other than the final Observation Date), the Notes will be automatically called,
in whole but not in part, at 100% of the principal amount, together with the relevant Contingent Coupon Payment. No further amounts
will be payable following an Automatic Call. If the Notes are not automatically called and the Least Performing Underlying declines
by more than 40% from its Starting Value, there is full exposure to declines in the Least Performing Underlying, and you will lose
a significant portion or all of your investment in the Notes. Otherwise, at maturity, you will receive the principal amount and,
if payable, the final Contingent Coupon Payment. The Notes are not traditional debt securities and it is possible that the Notes
will not pay any Contingent Coupon Payments, and you may lose a significant portion or all of your principal amount at maturity.
Any payments on the Notes will be calculated based on the $1,000 principal amount per Note and will depend on the performance of
the Underlyings, subject to our and BAC’s credit risk.
Issuer:
|
BofA Finance
|
Guarantor:
|
BAC
|
Denominations:
|
The Notes will be issued in minimum denominations of $1,000 and whole multiples of $1,000 in excess thereof.
|
Term:
|
Approximately 6 years, unless previously automatically called.
|
Underlyings:
|
The S&P 500® Index (the “SPX”) (Bloomberg symbol: “SPX”), the EURO STOXX 50® Index (the “SX5E”) (Bloomberg symbol: “SX5E”) and the Russell 2000® Index (the “RTY”) (Bloomberg symbol: “RTY”), each a price return index.
|
Pricing Date*:
|
July 25, 2019
|
Issue Date*:
|
July 30, 2019
|
Valuation Date*:
|
July 25, 2025, subject to postponement as described under “Description of the Notes—Certain Terms of the Notes—Events Relating to Observation Dates” of the accompanying product supplement. If the Valuation Date is not a business day, the Valuation Date will be postponed to the next business day.
|
Maturity Date*:
|
July 30, 2025
|
Starting Value:
|
With respect to each Underlying, its closing level on the pricing date.
|
Observation Value:
|
With respect to each Underlying, its closing level on the applicable Observation Date.
|
Ending Value:
|
With respect to each Underlying, its closing level on the Valuation Date, as determined by the Calculation Agent.
|
Coupon Barrier:
|
With respect to each Underlying, 60% of its Starting Value.
|
Threshold Value:
|
With respect to each Underlying, 60% of its Starting Value.
|
Contingent Coupon Payment:
|
If, on any quarterly Observation Date, the Observation Value of
each
Underlying is greater than or equal to its Coupon Barrier, we will pay a Contingent Coupon Payment of $16.25 per $1,000 in principal amount (equal to a rate of 1.625% per quarter or 6.50% per annum) on the applicable Contingent Payment Date.
|
Automatic Call:
|
Beginning in July 2021, all (but not less than all) of the Notes will be automatically called if the Observation Value of
each
Underlying is greater than or equal to its Starting Value on any Observation Date (other than the final Observation Date). If the Notes are automatically called, the Early Redemption Amount will be paid on the applicable Contingent Payment Date. No further amounts will be payable following an Automatic Call.
|
Early Redemption Amount:
|
For each $1,000 principal amount of Notes, $1,000 plus the applicable Contingent Coupon Payment.
|
|
CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-
2
|
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the S&P 500® Index, the EURO STOXX 50® Index and the Russell 2000
®
Index
Redemption Amount:
|
If the Notes have
not been automatically called prior to maturity, the Redemption Amount per $1,000 principal amount of Notes will be:
a)
If the Ending Value of the Least Performing Underlying
is greater than or equal to its Threshold Value:
$1,000; plus, if
the Ending Value of the Least Performing Underlying is greater than or equal to its Coupon Barrier, the final Contingent Coupon
Payment.
b)
If the Ending Value of the Least Performing Underlying
is less than its Threshold Value:
$1,000 + ($1,000
x Underlying Return of the Least Performing Underlying)
In this case,
the Redemption Amount will be less than 60% of the principal amount and could be zero.
|
Observation Dates*:
|
As set forth on page PS-4.
|
Contingent Payment Dates*:
|
As set forth on page PS-4.
|
Calculation Agent:
|
BofA Securities, Inc. (“BofAS”), an affiliate of BofA Finance.
|
Selling Agent:
|
BofAS.
|
CUSIP:
|
09709TTB7
|
Underlying Return:
|
With
respect to each Underlying,
|
Least Performing Underlying:
|
The Underlying with the lowest Underlying Return.
|
Events of Default and Acceleration:
|
If an Event of Default, as defined in the senior indenture and in the section entitled “Events of Default and Rights of Acceleration” beginning on page 35 of the accompanying prospectus, with respect to the Notes occurs and is continuing, the amount payable to a holder of the Notes upon any acceleration permitted under the senior indenture will be equal to the amount described under the caption “—Redemption Amount” above, calculated as though the date of acceleration were the Maturity Date of the Notes and as though the Valuation Date were the third trading day prior to the date of acceleration. We will also determine whether the final Contingent Coupon Payment is payable based upon the levels of the Underlyings on the deemed Valuation Date; any such final Contingent Coupon Payment will be prorated by the Calculation Agent to reflect the length of the final contingent payment period. In case of a default in the payment of the Notes, whether at their maturity or upon acceleration, the Notes will not bear a default interest rate.
|
*Subject to change.
|
Additional Terms of the Notes
With respect to the SX5E, a “trading
day” means a day on which (1) the Eurex or any successor is open for trading and (2) the SX5E or any successor is calculated
and published.
|
CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-
3
|
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the S&P 500® Index, the EURO STOXX 50® Index and the Russell 2000
®
Index
Observation Dates and Contingent Payment Dates
Observation Dates*
|
|
Contingent Payment Dates**
|
October 25, 2019
|
|
October 30, 2019
|
January 27, 2020
|
|
January 30, 2020
|
April 27, 2020
|
|
April 30, 2020
|
July 27, 2020
|
|
July 30, 2020
|
October 26, 2020
|
|
October 29, 2020
|
January 25, 2021
|
|
January 28, 2021
|
April 26, 2021
|
|
April 29, 2021
|
July 26, 2021
|
|
July 29, 2021
|
October 25, 2021
|
|
October 28, 2021
|
January 25, 2022
|
|
January 28, 2022
|
April 25, 2022
|
|
April 28, 2022
|
July 25, 2022
|
|
July 28, 2022
|
October 25, 2022
|
|
October 28, 2022
|
January 25, 2023
|
|
January 30, 2023
|
April 25, 2023
|
|
April 28, 2023
|
July 25, 2023
|
|
July 28, 2023
|
October 25, 2023
|
|
October 30, 2023
|
January 25, 2024
|
|
January 30, 2024
|
April 25, 2024
|
|
April 30, 2024
|
July 25, 2024
|
|
July 30, 2024
|
October 25, 2024
|
|
October 30, 2024
|
January 27, 2025
|
|
January 30, 2025
|
April 25, 2025
|
|
April 30, 2025
|
July 25, 2025 (the “Valuation Date”)
|
|
July 30, 2025 (the “Maturity Date”)
|
* The Observation Dates are subject to postponement as
set forth in “Description of the Notes—Certain Terms of the Notes—Events Relating to Observation Dates”
on page PS-19 of the accompanying product supplement.
If an Observation Date is not a business day, such Observation Date will be postponed to the next business day.
** Postponement of a quarterly Observation Date will
not cause the postponement of the Contingent Payment Date relating to such Observation Date.
Any payments
on the Notes depend on the credit risk of BofA Finance, as issuer, and BAC, as guarantor, and on the performance of the Underlyings.
The economic terms of the Notes 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 affiliates
enter into. 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, referral fee and the hedging
related charges described below (see “Risk Factors” beginning on page PS-8), will reduce the economic terms of the
Notes to you and the initial estimated value of the Notes. 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 as of the pricing date.
The initial
estimated value range of the Notes as of the date of this pricing supplement is set forth on the cover page of this pricing supplement.
The final pricing supplement will set forth the initial estimated value of the Notes as of the pricing date. For more information
about the initial estimated value and the structuring of the Notes, see “Risk Factors” beginning on page PS-8 and “Structuring
the Notes” on page PS-20.
|
CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-
4
|
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the S&P 500® Index, the EURO STOXX 50® Index and the Russell 2000
®
Index
Contingent Coupon Payment and Redemption
Amount Determination
On each Contingent
Payment Date, you may receive a Contingent Coupon Payment determined as follows:
Assuming the Notes have not been
automatically called, on the Maturity Date, you will receive a cash payment per Note determined as follows:
|
CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-
5
|
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the S&P 500® Index, the EURO STOXX 50® Index and the Russell 2000
®
Index
Total Contingent Coupon Payment Examples
The
table below illustrates the hypothetical total Contingent Coupon Payments per $1,000 in principal amount over the term of the Notes,
based
on
the Contingent Coupon Payment of $16.25 per Note, depending on how many Contingent Coupon Payments are payable prior to an Automatic
Call or maturity. Depending on the performance of the Underlyings, you may not receive any Contingent Coupon Payments during the
term of the Notes.
Number of Contingent Coupon Payment
s
|
Total Contingent Coupon Payment
s
|
0
|
$0.00
|
2
|
$32.50
|
4
|
$65.00
|
6
|
$97.50
|
8
|
$130.00
|
10
|
$162.50
|
12
|
$195.00
|
14
|
$227.50
|
16
|
$260.00
|
18
|
$292.50
|
20
|
$325.00
|
22
|
$357.50
|
24
|
$390.00
|
|
CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-
6
|
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the S&P 500® Index, the EURO STOXX 50® Index and the Russell 2000
®
Index
Hypothetical Payout Profile and Examples
of Payments at Maturity
Contingent Income Auto-Callable
Yield Notes® Table
The following
table is for purposes of illustration only. It assumes the Notes have not been automatically called prior to maturity and is based
on
hypothetical
values and shows
hypothetical
returns on the Notes. The table illustrates the calculation of the
Redemption Amount and total return based on a hypothetical Starting Value of 100, a hypothetical Coupon Barrier of 60 for the Least
Performing Underlying, a hypothetical Threshold Value of 60 for the Least Performing Underlying, the Contingent Coupon Payment
of $16.25 per Note and a range of hypothetical Ending Values of the Least Performing Underlying.
The actual amount you receive
and the resulting total return will depend on the actual Starting Values, Coupon Barriers, Threshold Values, Observation Values
and Ending Values of the Underlyings, whether the Notes are automatically called prior to maturity, 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 Underlyings, see “The Underlyings” section below. Each Underlying is a price return index and
as such its Ending Value will not include any income generated by dividends paid on the stocks included in that Underlying, 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.
Ending Value of the
Least Performing Underlying
|
Underlying Return of the
Least Performing Underlying
|
Redemption
Amount per Note
|
Return
on the Notes
(1)
|
160.00
|
60.00%
|
$1,016.25
(2)
|
1.625%
|
150.00
|
50.00%
|
$1,016.25
|
1.625%
|
140.00
|
40.00%
|
$1,016.25
|
1.625%
|
130.00
|
30.00%
|
$1,016.25
|
1.625%
|
120.00
|
20.00%
|
$1,016.25
|
1.625%
|
110.00
|
10.00%
|
$1,016.25
|
1.625%
|
105.00
|
5.00%
|
$1,016.25
|
1.625%
|
102.00
|
2.00%
|
$1,016.25
|
1.625%
|
100.00
(3)
|
0.00%
|
$1,016.25
|
1.625%
|
90.00
|
-10.00%
|
$1,016.25
|
1.625%
|
70.00
|
-30.00%
|
$1,016.25
|
1.625%
|
60.00
(4)
|
-40.00%
|
$1,016.25
|
1.625%
|
59.99
|
-40.01%
|
$599.90
|
-40.01%
|
55.00
|
-45.00%
|
$550.00
|
-45.00%
|
50.00
|
-50.00%
|
$500.00
|
-50.00%
|
0.00
|
-100.00%
|
$0.00
|
-100.00%
|
|
(1)
|
The “Return on the
Notes” is calculated based on the Redemption Amount and potential final Contingent Coupon Payment, not including any Contingent
Coupon Payments paid prior to maturity.
|
|
(2)
|
This amount represents
the sum of the principal amount and the final Contingent Coupon Payment.
|
|
(3)
|
The hypothetical Starting
Value of 100 used in the table above has been chosen for illustrative purposes only and does not represent a likely Starting Value
for any Underlying.
|
|
(4)
|
This is the
hypothetical
Coupon Barrier and
Threshold Value of the Least Performing Underlying.
|
|
CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-
7
|
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the S&P 500® Index, the EURO STOXX 50® Index and the Russell 2000
®
Index
Risk Factors
Your investment in the Notes
entails significant risks, many of which differ from those of a conventional debt security. Your decision to purchase the Notes
should be made only after carefully considering the risks of an investment in the Notes, including those discussed below, with
your advisors in light of your particular circumstances. The Notes are not an appropriate investment for you if you are not knowledgeable
about significant elements of the Notes or financial matters in general. You should carefully review the more detailed explanation
of risks relating to the Notes in the “Risk Factors” sections beginning on page PS-5 of the accompanying product supplement,
page S-4 of the accompanying prospectus supplement and page 7 of the accompanying prospectus identified on page PS-25 below.
|
•
|
Your
investment may result in a loss; there is no guaranteed return of principal.
There is no fixed principal repayment amount on
the Notes at maturity. If the Notes are not called and the Ending Value of
any
Underlying is less than its Threshold Value,
you will lose 1% of the principal amount for each 1% that the Ending Value of the Least Performing Underlying is less than its
Starting Value. In that case, you will lose a significant portion or all of your investment in the Notes.
|
|
•
|
Your
return on the Notes is limited to the return represented by the Contingent Coupon Payments, if any, over the term of the Notes.
Your return on the Notes is limited to the Contingent Coupon Payments paid over the term of the Notes, regardless of the extent
to which the Ending Value of any Underlying exceeds its Starting Value. Similarly, the amount payable at maturity or upon an Automatic
Call will never exceed the sum of the principal amount and the applicable Contingent Coupon Payment, regardless of the extent to
which the Observation Value of any Underlying exceeds its Starting Value. In contrast, a direct investment in the securities included
in one or more of the Underlyings would allow you to receive the benefit of any appreciation in their prices. Thus, any return
on the Notes will not reflect the return you would realize if you actually owned those securities and received the dividends paid
or distributions made on them.
|
|
•
|
The
Notes are subject to a potential Automatic Call, which would limit your ability to receive the Contingent Coupon Payments over
the full term of the Notes.
The Notes are subject to a potential Automatic Call. Beginning in July 2021, the Notes will be
automatically called if, on any Observation Date (other than the final Observation Date), the Observation Value of each Underlying
is greater than or equal to its Starting Value. If the Notes are automatically called, you will be entitled to receive the principal
amount and the Contingent Coupon Payment with respect to the applicable Observation Date. In this case, you will lose the opportunity
to continue to receive Contingent Coupon Payments after the date of the Automatic Call. If the Notes are called prior to the maturity
date, you may be unable to invest in other securities with a similar level of risk that could provide a return that is similar
to the Notes.
|
|
•
|
You
may not receive any Contingent Coupon Payments.
The Notes do not provide for any regular fixed coupon payments. Investors in
the Notes will not necessarily receive any Contingent Coupon Payments on the Notes. If the Observation Value of any Underlying
is less than its Coupon Barrier on an Observation Date, you will not receive the Contingent Coupon Payment applicable to that Observation
Date. If the Observation Value of any Underlying is less than its Coupon Barrier on all the Observation Dates during the term of
the Notes, you will not receive any Contingent Coupon Payment during the term of the Notes, and will not receive a positive return
on the Notes.
|
|
•
|
Your return
on the Notes may be less than the yield on a conventional debt security of comparable maturity.
Any return that you receive
on the Notes may be less than the return you would earn if you purchased a conventional debt security with the same maturity date.
As a result, your investment in the Notes may not reflect the full opportunity cost to you when you consider factors, such as inflation,
that affect the time value of money. In addition, if interest rates increase during the term of the Notes, the Contingent Coupon
Payment (if any) may be less than the yield on a conventional debt security of comparable maturity.
|
|
•
|
Any
payments on the Notes are subject to the credit risk of BofA Finance and the Guarantor, and actual or perceived changes in BofA
Finance or the Guarantor’s creditworthiness are expected to affect the value of the Notes
. The Notes are our senior unsecured
debt securities. Any payment on the Notes will be fully and unconditionally guaranteed by the Guarantor. The Notes are not guaranteed
by any entity other than the Guarantor. As a result, your receipt of the Early Redemption Amount or the Redemption Amount at maturity,
as applicable, will be dependent upon our ability and the ability of the Guarantor to repay our respective obligations under the
Notes on the applicable Contingent Payment Date or the maturity date, regardless of the Ending Value of the Least Performing Underlying
as compared to its Starting Value.
|
|
•
|
We
are a finance subsidiary and, as such, will have limited assets and operations.
We are a finance subsidiary of BAC and will
have no assets, operations or revenues other than those related to the issuance, administration and repayment of our debt securities
that are guaranteed by the Guarantor. As a finance subsidiary, to meet our obligations under the Notes, we are dependent upon payment
or contribution of funds and/or repayment of outstanding loans from the Guarantor and/or its other subsidiaries. Therefore, our
ability to make payments on the Notes may be limited.
|
|
•
|
The
public offering price you pay for the Notes will exceed their initial estimated value.
The range of initial estimated values
of the Notes that is provided on the cover of this preliminary pricing supplement, and the initial estimated value as of the pricing
date that will be provided on the cover of the final pricing supplement, are each 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 the Guarantor, the Guarantor’s internal funding rate, mid-market
terms on hedging transactions, expectations on interest rates, dividends 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.
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 their initial estimated value. This is due to, among other things, changes in the level of the Underlying, the
|
|
CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-
8
|
Contingent Income Auto-Callable Yield Notes Linked to the Least Performing of the S&P 500® Index, the EURO STOXX 50® Index and the Russell 2000
®
Index
Guarantor’s internal funding rate,
and the inclusion in the public offering price of the underwriting discount, referral fee and the hedging related charges, all
as further described in "Structuring the Notes" below. 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, 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 Underlyings,
our and BAC’s creditworthiness and changes in market conditions.
|
|
•
|
We
cannot assure you that a trading market for your Notes will ever develop or be maintained.
We will not list the Notes on any
securities exchange. We cannot predict how the Notes will trade in any secondary market or whether that market will be liquid or
illiquid.
|
|
•
|
The
Contingent Coupon Payment or Redemption Amount, as applicable, will not reflect the levels of the Underlyings other than on the
Observation Dates.
The levels of the Underlyings during the term of the Notes other than on the Observation Dates will not
affect payments on the Notes. Notwithstanding the foregoing, investors should generally be aware of the performance of the Underlyings
while holding the Notes. The Calculation Agent will determine whether each Contingent Coupon Payment is payable and calculate the
Contingent Coupon Payment or the Redemption Amount, as applicable, by comparing only the Starting Value, the Coupon Barrier or
the Threshold Value, as applicable, to the Observation Value or the Ending Value for each Underlying. No other levels of the Underlyings
will be taken into account. As a result, if the Notes are not automatically called prior to maturity, you will receive less than
the principal amount at maturity even if the level of each Underlying has increased at certain times during the term of the Notes
before the Least Performing Underlying decreases to a level that is less than its Threshold Value as of the Valuation Date.
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Because
the Notes are linked to the least performing (and not the average performance) of the Underlyings, you may not receive any return
on the Notes and may lose some or all of your principal amount even if the Observation Value of one Underlying is always greater
than or equal to its Coupon Barrier or Threshold Value, as applicable.
Your Notes are linked to the least performing of the
Underlyings, and a change in the level of one Underlying may not correlate with changes in the level of the other Underlying(s).
The Notes are not linked to a basket composed of the Underlyings, where the depreciation in the level of one Underlying could be
offset to some extent by the appreciation in the level of the other Underlying(s). In the case of the Notes, the individual performance
of each Underlying would not be combined, and the depreciation in the level of one Underlying would not be offset by any appreciation
in the level of the other Underlying(s). Even if the Observation Value of an Underlying is at or above its Coupon Barrier on an
Observation Date, you will not receive the Contingent Coupon Payment with respect to that Observation Date if the Observation Value
of the Least Performing Underlying is below its Coupon Barrier on that day. In addition, even if the Ending Value of an Underlying
is at or above its Threshold Value, you will lose a portion of your principal if the Ending Value of the Least Performing Underlying
is below its Threshold Value.
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The
Notes are subject to risks associated with foreign securities markets.
The SX5E includes certain foreign equity securities.
You should be aware that investments in securities linked to the value of foreign equity securities involve particular risks. The
foreign securities markets comprising the SX5E may have less liquidity and may be more volatile than U.S. or other securities markets
and market developments may affect foreign markets differently from U.S. or other securities markets. Direct or indirect government
intervention to stabilize these foreign securities markets, as well as cross-shareholdings in foreign companies, may affect trading
prices and volumes in these markets. Also, there is generally less publicly available information about foreign companies than
about those U.S. companies that are subject to the reporting requirements of the U.S. Securities and Exchange Commission, and foreign
companies are subject to accounting, auditing and financial reporting standards and requirements that differ from those applicable
to U.S. reporting companies. Prices of securities in foreign countries are subject to political, economic, financial and social
factors that apply in those geographical regions. These factors, which could negatively affect those securities markets, include
the possibility of recent or future changes in a foreign government’s economic and fiscal policies, the possible imposition
of, or changes in, currency exchange laws or other laws or restrictions applicable to foreign companies or investments in foreign
equity securities and the possibility of fluctuations in the rate of exchange between currencies, the possibility of outbreaks
of hostility and political instability and the possibility of natural disaster or adverse public health developments in the region.
Moreover, foreign economies may differ favorably or unfavorably from the U.S. economy in important respects such as growth of gross
national product, rate of inflation, capital reinvestment, resources and self-sufficiency.
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The
Notes are subject to risks associated with small-size capitalization companies.
The stocks composing the RTY are issued by
companies with small-sized market capitalization. The stock prices of small-size companies may be more volatile than stock prices
of large capitalization companies. Small-size capitalization companies may be less able to withstand adverse economic, market,
trade and competitive conditions relative to larger companies. Small-size capitalization companies may also be more susceptible
to adverse developments related to their products or services.
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The
publisher of an Underlying may adjust that Underlying in a way that affects its levels, and the publisher has no obligation to
consider your interests.
The publisher of an Underlying can add, delete, or substitute the components included in that
Underlying or make other methodological changes that could change its level. Any of these actions could adversely affect the value
of your Notes.
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Trading and hedging
activities by us, the Guarantor and any of our other affiliates may create conflicts of interest with you and may affect your return
on the Notes and their market value.
We, the Guarantor or one or more of our other affiliates, including BofAS, may buy or
sell the
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securities held by or included in the Underlyings,
or futures or options contracts on the Underlyings or those securities, or other listed or over-the-counter derivative instruments
linked to the Underlyings or those securities. While we, the Guarantor or one or more of our other affiliates, including BofAS,
may from time to time own securities represented by the Underlyings, except to the extent that BAC’s common stock may be
included in the Underlyings, we, the Guarantor and our other affiliates, including BofAS, do not control any company included in
the Underlyings, and have not verified any disclosure made by any other company. We, the Guarantor or one or more of our other
affiliates, including BofAS, may execute such purchases or sales for our own or their own accounts, for business reasons, or in
connection with hedging our obligations under the Notes. These transactions may present a conflict of interest between your interest
in the Notes and the interests we, the Guarantor and our other affiliates, including BofAS, may have in our proprietary accounts,
in facilitating transactions, including block trades, for our or their other customers, and in accounts under our or their management.
These transactions may affect the value of the Underlyings in a manner that could be adverse to your investment in the Notes. On
or before the pricing date, any purchases or sales by us, the Guarantor or our other affiliates, including BofAS or others on its
behalf (including for the purpose of hedging anticipated exposures), may affect the value of the Underlyings. Consequently, the
value of the Underlyings may change subsequent to the pricing date, adversely affecting the market value of the Notes.
We, the
Guarantor or one or more of our other affiliates, including BofAS, may also engage in hedging activities that could affect the
value of the Underlyings on the pricing date. In addition, these activities may decrease the market value of your Notes prior to
maturity, and may affect the amounts to be paid on the Notes. We, the Guarantor or one or more of our other affiliates, including
BofAS, may purchase or otherwise acquire a long or short position in the Notes and may hold or resell the Notes. For example, BofAS
may enter into these transactions in connection with any market making activities in which it engages. We cannot assure you that
these activities will not adversely affect the value of the Underlyings, the market value of your Notes prior to maturity or the
amounts payable on the Notes.
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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. One of our affiliates will be the Calculation Agent for the Notes and, as such, will
make a variety of determinations relating to the Notes, including the amounts that will be paid on the Notes. Under some circumstances,
these duties could result in a conflict of interest between its status as our affiliate and its responsibilities as Calculation
Agent.
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The U.S. federal income
tax consequences of an investment in the Notes are uncertain, and may be adverse to a holder of the Notes.
No statutory, judicial,
or administrative authority directly addresses the characterization of the Notes or securities similar to the Notes for U.S. federal
income tax purposes. As a result, significant aspects of the U.S. federal income tax consequences of an investment in the Notes
are not certain. Under the terms of the Notes, you will have agreed with us to treat the Notes as contingent income-bearing single
financial contracts, as described under “U.S. Federal Income Tax Summary—General.” If the Internal Revenue Service
(the “IRS”) were successful in asserting an alternative characterization for the Notes, the timing and character of
gain or loss with respect to the Notes may differ. No ruling will be requested from the IRS with respect to the Notes and no assurance
can be given that the IRS will agree with the statements made in the section entitled “U.S. Federal Income Tax Summary.”
You are urged to consult with your own tax advisor regarding all aspects of the U.S. federal income tax consequences of investing
in the Notes.
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The Underlyings
All disclosures contained in this
pricing supplement regarding the Underlyings, including, without limitation, their make-up, method of calculation, and changes
in their components, have been derived from publicly available sources. The information reflects the policies of, and is subject
to change by, each of S&P Dow Jones Indices LLC (“SPDJI”), the sponsor of the SPX, STOXX Limited (“STOXX”),
the sponsor of the SX5E and FTSE Russell, the sponsor of the RTY. We refer to SPDJI, STOXX and FTSE Russell as the “Underlying
Sponsors”. The Underlying Sponsors, which license the copyright and all other rights to the Underlyings, have no obligation
to continue to publish, and may discontinue publication of, the Underlyings. The consequences of any Underlying Sponsor discontinuing
publication of the applicable Underlying are discussed in “Description of the Notes—Discontinuance of an Index”
in the accompanying product supplement. None of us, the Guarantor, the Calculation Agent, or BofAS accepts any responsibility for
the calculation, maintenance or publication of any Underlying or any successor index. None of us, the Guarantor, BofAS or any of
our other affiliates makes any representation to you as to the future performance of the Underlyings. You should make your own
investigation into the Underlyings.
The S&P 500® Index
The SPX includes a representative sample
of 500 companies in leading industries of the U.S. economy. The SPX is intended to provide an indication of the pattern of common
stock price movement. The calculation of the level of the SPX 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
SPX 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 Underlying Sponsor may from time to
time, in its sole discretion, add companies to, or delete companies from, the SPX to achieve the objectives stated above
.
Company additions to the SPX must have
an unadjusted company market capitalization of $8.2 billion or more (an increase from the previous requirement of an unadjusted
company market capitalization of $6.1 billion or more).
SPDJI calculates the SPX by reference
to the prices of the constituent stocks of the SPX 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 SPX constituent stocks
and received the dividends paid on those stocks.
Computation of the SPX
While the SPDJI
sponsor currently employs the following methodology to calculate the Underlying, no assurance can be given that the Underlying
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 SPX 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, SPDJI began shifting the SPX halfway from a market capitalization weighted formula to a
float-adjusted formula, before moving the SPX to full float adjustment on September 16, 2005. SPDJI’s criteria for selecting
stocks for the SPX did not change with the shift to float adjustment. However, the adjustment affects each company’s weight
in the SPX.
Under float adjustment, the share counts
used in calculating the SPX 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 SPX. 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.
Treasury stock, stock options, restricted
shares, 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, SPDJI 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, SPDJI 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 SPX. Constituents of the SPX prior to July 31, 2017 with multiple share class lines will be
grandfathered in and continue to be included in the SPX. If a constituent company of the SPX reorganizes into a multiple share
class line structure,
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that company will remain in the SPX at the discretion of the S&P
Index Committee in order to minimize turnover.
The SPX is calculated using a base-weighted
aggregate methodology. The level of the SPX 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 SPX 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 SPX, it serves as a link
to the original base period level of the SPX. The index divisor keeps the SPX comparable over time and is the manipulation point
for all adjustments to the SPX, 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 SPX, and do not require index divisor adjustments.
To prevent the level of the SPX from
changing due to corporate actions, corporate actions which affect the total market value of the SPX require an index divisor adjustment.
By adjusting the index divisor for the change in market value, the level of the SPX remains constant and does not reflect the corporate
actions of individual companies in the SPX. Index divisor adjustments are made after the close of trading and after the calculation
of the SPX 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 change
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.
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Historical Performance of the
SPX
The following
graph sets forth the daily historical performance of the SPX in the period from January 1, 2008 through July 17, 2019. 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. The horizontal line in the graph represents its hypothetical Coupon Barrier and Threshold Value of 1,790.65
(rounded to two decimal places), which is 60% of its hypothetical Starting Value of 2,984.42, which was its closing level on July
17, 2019. The actual Starting Value, Coupon Barrier and Threshold Value will be determined on the pricing date.
This historical
data on the SPX is not necessarily indicative of the future performance of the SPX or what the value of the Notes may be. Any historical
upward or downward trend in the level of the SPX during any period set forth above is not an indication that the level of the SPX
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 SPX.
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, Merrill Lynch, Pierce, Fenner & Smith
Incorporated (“MLPF&S”). The SPX 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 SPX to track general market performance. S&P Dow Jones Indices’ only relationship to MLPF&S
with respect to the SPX is the licensing of the SPX and certain trademarks, service marks and/or trade names of S&P Dow Jones
Indices and/or its third party licensors. The SPX is determined, composed and calculated by S&P Dow Jones Indices without regard
to us, MLPF&S, 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 SPX. 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 SPX 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 SPX. 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
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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, 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 POSSIBILITY 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.
The EURO STOXX 50® Index
The SX5E was
created by STOXX, which is owned by Deutsche Börse AG. Publication of the SX5E began in February 1998, based on an initial
index level of 1,000 at December 31, 1991.
Index Composition and Maintenance
The Index
is composed of 50 stocks from 11 Eurozone countries (Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the
Netherlands, Portugal and Spain) of the STOXX Europe 600 Supersector indices. The STOXX 600 Supersector indices contain the 600
largest stocks traded on the major exchanges of 18 European countries and are organized into the following 19 Supersectors: automobiles
& parts; banks; basic resources; chemicals; construction & materials; financial services; food & beverage; health care;
industrial goods & services; insurance; media; oil & gas; personal & household goods; real estate; retail; technology;
telecommunications; travel & leisure and utilities.
For each of
the 19 EURO STOXX regional supersector indices, the stocks are ranked in terms of free-float market capitalization. The largest
stocks are added to the selection list until the coverage is close to, but still less than, 60% of the free-float market capitalization
of the corresponding supersector index. If the next highest-ranked stock brings the coverage closer to 60% in absolute terms, then
it is also added to the selection list. All current stocks in the SX5E are then added to the selection list. All of the stocks
on the selection list are then ranked in terms of free-float market capitalization to produce the final index selection list. The
largest 40 stocks on the selection list are selected; the remaining 10 stocks are selected from the largest remaining current stocks
ranked between 41 and 60; if the number of stocks selected is still below 50, then the largest remaining stocks are selected until
there are 50 stocks. In exceptional cases, STOXX’s management board can add stocks to and remove them from the selection
list.
The index
components are subject to a capped maximum index weight of 10%, which is applied on a quarterly basis.
The composition
of the SX5E is reviewed annually, based on the closing stock data on the last trading day in August. Changes in the composition
of the SX5E are made to ensure that the SX5E includes the 50 market sector leaders from within the EURO STOXX
®
Index.
The free float
factors for each component stock used to calculate the SX5E, as described below, are reviewed, calculated, and implemented on a
quarterly basis and are fixed until the next quarterly review.
The SX5E is
subject to a “fast exit rule.” The index components are monitored for any changes based on the monthly selection list
ranking. A stock is deleted from the SX5E if: (a) it ranks 75 or below on the monthly selection list and (b) it has been ranked
75 or below for a consecutive period of two months in the monthly selection list. The highest-ranked stock that is not an index
component will replace it. Changes will be implemented on the close of the fifth trading day of the month, and are effective the
next trading day.
The SX5E is
also subject to a “fast entry rule.” All stocks on the latest selection lists and initial public offering (IPO) stocks
are reviewed for a fast-track addition on a quarterly basis. A stock is added, if (a) it qualifies for the latest STOXX blue-chip
selection list generated end of February, May, August or November and (b) it ranks within the “lower buffer” on this
selection list.
The SX5E is
also reviewed on an ongoing monthly basis. Corporate actions (including initial public offerings, mergers and takeovers, spin-offs,
delistings, and bankruptcy) that affect the index composition are announced immediately, implemented two trading days later and
become effective on the next trading day after implementation.
Index Calculation
The SX5E is
calculated with the “Laspeyres formula,” which measures the aggregate price changes in the component stocks against
a fixed base quantity weight. The formula for calculating the index value can be expressed as follows:
EURO STOXX
50
®
Index =
Free float market capitalization of the EURO STOXX 50
®
Index
Divisor
The “free
float market capitalization of the Index” is equal to the sum of the product of the price, the number of shares and the free
float factor and the weighting cap factor for each component stock as of the time the SX5E is being calculated.
The SX5E is
also subject to a divisor, which is adjusted to maintain the continuity of the index values across changes due to corporate actions,
such as the deletion and addition of stocks, the substitution of stocks, stock dividends, and stock splits.
Neither we
nor any of our affiliates, including MLPF&S, accepts any responsibility for the calculation, maintenance, or publication of,
or for any error,
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omission, or disruption in, the SX5E or any
successor to the SX5E. STOXX does not guarantee the accuracy or the completeness of the SX5E or any data included in the SX5E.
STOXX assumes no liability for any errors, omissions, or disruption in the calculation and dissemination of the SX5E. STOXX disclaims
all responsibility for any errors or omissions in the calculation and dissemination of the SX5E or the manner in which the SX5E
is applied in determining the amount payable on the Notes at maturity.
Historical Performance of the
SX5E
The following
graph sets forth the daily historical performance of the SX5E in the period from January 1, 2008 through July 17, 2019. 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. The horizontal line in the graph represents its hypothetical Coupon Barrier and Threshold Value of 2,100.95
(rounded to two decimal places), which is 60% of its hypothetical Starting Value of 3,501.58, which was its closing level on July
17, 2019. The actual Starting Value, Coupon Barrier and Threshold Value will be determined on the pricing date.
This historical
data on the SX5E is not necessarily indicative of the future performance of the SX5E or what the value of the Notes may be. Any
historical upward or downward trend in the level of the SX5E during any period set forth above is not an indication that the level
of the SX5E 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 SX5E.
License
Agreement
One of our affiliates
has entered into a non-exclusive license agreement with STOXX providing for the license to it and certain of its affiliated companies,
including us, of the right to use indices owned and published by STOXX (including the SX5E) in connection with certain securities,
including the Notes.
The license agreement
requires that the following language be stated in this pricing supplement:
“STOXX Limited,
Deutsche Börse Group and their licensors, research partners or data providers have no relationship to us other than the licensing
of the SX5E and the related trademarks for use in connection with the Notes.
STOXX, Deutsche Börse Group and
their licensors, research partners or data providers do
not
:
|
·
|
sponsor,
endorse, sell or promote the Notes.
|
|
·
|
recommend
that any person invest in the Notes or any other securities.
|
|
·
|
have any responsibility or liability for or make
any decisions about the timing, amount or pricing of the Notes.
|
|
·
|
have any responsibility or liability for the administration,
management or marketing of the Notes.
|
|
·
|
consider the needs of the Notes or the owners of
the Notes in determining, composing or calculating the SX5E or have any obligation to do so.
|
STOXX, Deutsche Börse Group and
their licensors, research partners or data providers give no warranty, and exclude any liability (whether in negligence or otherwise),
in connection with the Notes or their performance.
STOXX does not assume any contractual
relationship with the purchasers of the Notes or any other third parties.
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®
Index
Specifically,
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·
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STOXX, Deutsche Börse Group and their licensors,
research partners or data providers do not give any warranty, express or implied, and exclude any liability about:
|
|
o
|
The results to be obtained by the Notes, the owner
of the Notes or any other person in connection with the use of the SX5E and the data included in the SX5E;
|
|
o
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The accuracy, timeliness, and completeness of the
SX5E and its data;
|
|
o
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The merchantability and the fitness for a particular
purpose or use of the SX5E and its data;
|
|
o
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The performance of the Notes generally.
|
|
·
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STOXX, Deutsche Börse Group and their licensors,
research partners or data providers give no warranty and exclude any liability, for any errors, omissions or interruptions in the
SX5E or its data;
|
|
·
|
Under no circumstances will STOXX, Deutsche Börse
Group or their licensors, research partners or data providers be liable (whether in negligence or otherwise) for any lost profits
or indirect, punitive, special or consequential damages or losses, arising as a result of such errors, omissions or interruptions
in the SX5E or its data or generally in relation to the Notes, even in circumstances where STOXX, Deutsche Börse Group or
their licensors, research partners or data providers are aware that such loss or damage may occur.
|
The licensing agreement discussed above
is solely for our benefit and that of STOXX, and not for the benefit of the owners of the Notes or any other third parties.”
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CONTINGENT INCOME AUTO-CALLABLE YIELD NOTES | PS-
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®
Index
The Russell 2000® Index
The RTY was
developed by Russell Investments (“Russell”) before FTSE International Limited and Russell combined in 2015 to create
FTSE Russell, which is wholly owned by London Stock Exchange Group. Additional information on the RTY is available at the following
website: http://www.ftserussell.com. No information on that website is deemed to be included or incorporated by reference in this
pricing supplement.
Russell began
dissemination of the RTY (Bloomberg L.P. index symbol “RTY”) on January 1, 1984. FTSE Russell calculates and publishes
the RTY. The RTY was set to 135 as of the close of business on December 31, 1986. The RTY is designed to track the performance
of the small capitalization segment of the U.S. equity market. As a subset of the Russell 3000
®
Index, the RTY consists
of the smallest 2,000 companies included in the Russell 3000
®
Index. The Russell 3000
®
Index measures
the performance of the largest 3,000 U.S. companies, representing approximately 98% of the investable U.S. equity market. The RTY
is determined, comprised, and calculated by FTSE Russell without regard to the Notes.
Selection of Stocks Comprising
the RTY
All companies
eligible for inclusion in the RTY must be classified as a U.S. company under FTSE Russell’s country-assignment methodology.
If a company is incorporated, has a stated headquarters location, and trades in the same country (American Depositary Receipts
and American Depositary Shares are not eligible), then the company is assigned to its country of incorporation. If any of the three
factors are not the same, FTSE Russell defines three Home Country Indicators (“HCIs”): country of incorporation, country
of headquarters, and country of the most liquid exchange (as defined by a two-year average daily dollar trading volume) (“ADDTV”)
from all exchanges within a country. Using the HCIs, FTSE Russell compares the primary location of the company’s assets with
the three HCIs. If the primary location of its assets matches any of the HCIs, then the company is assigned to the primary location
of its assets. If there is insufficient information to determine the country in which the company’s assets are primarily
located, FTSE Russell will use the primary country from which the company’s revenues are primarily derived for the comparison
with the three HCIs in a similar manner. FTSE Russell uses the average of two years of assets or revenues data to reduce potential
turnover. If conclusive country details cannot be derived from assets or revenues data, FTSE Russell will assign the company to
the country of its headquarters, which is defined as the address of the company’s principal executive offices, unless that
country is a Benefit Driven Incorporation “BDI” country, in which case the company will be assigned to the country
of its most liquid stock exchange. BDI countries include: Anguilla, Antigua and Barbuda, Bahamas, Barbados, Belize, Bermuda, Bonaire,
British Virgin Islands, Cayman Islands, Channel Islands, Cook Islands, Curacao, Faroe Islands, Gibraltar, Guernsey, Isle of Man,
Jersey, Liberia, Marshall Islands, Panama, Saba, Sint Eustatius, Sint Maarten, and Turks and Caicos Islands. For any companies
incorporated or headquartered in a U.S. territory, including countries such as Puerto Rico, Guam, and U.S. Virgin Islands, a U.S.
HCI is assigned.
All securities
eligible for inclusion in the RTY must trade on a major U.S. exchange. Stocks must have a closing price at or above $1.00 on their
primary exchange on the last trading day in May to be eligible for inclusion during annual reconstitution. However, in order to
reduce unnecessary turnover, if an existing member’s closing price is less than $1.00 on the last day of May, it will be
considered eligible if the average of the daily closing prices (from its primary exchange) during the month of May is equal to
or greater than $1.00. Initial public offerings are added each quarter and must have a closing price at or above $1.00 on the last
day of their eligibility period in order to qualify for index inclusion. If an existing stock does not trade on the “rank
day” (typically the last trading day in May but a confirmed timetable is announced each spring) but does have a closing price
at or above $1.00 on another eligible U.S. exchange, that stock will be eligible for inclusion.
An important
criterion used to determine the list of securities eligible for the RTY is total market capitalization, which is defined as the
market price as of the last trading day in May for those securities being considered at annual reconstitution times the total number
of shares outstanding. Where applicable, common stock, non-restricted exchangeable shares and partnership units/membership interests
are used to determine market capitalization. Any other form of shares such as preferred stock, convertible preferred stock, redeemable
shares, participating preferred stock, warrants and rights, installment receipts or trust receipts, are excluded from the calculation.
If multiple share classes of common stock exist, they are combined. In cases where the common stock share classes act independently
of each other (e.g., tracking stocks), each class is considered for inclusion separately. If multiple share classes exist, the
pricing vehicle will be designated as the share class with the highest two-year trading volume as of the rank day in May.
Companies
with a total market capitalization of less than $30 million are not eligible for the RTY. Similarly, companies with only 5% or
less of their shares available in the marketplace are not eligible for the RTY. Royalty trusts, limited liability companies, closed-end
investment companies (companies that are required to report Acquired Fund Fees and Expenses, as defined by the SEC, including business
development companies), blank check companies, special purpose acquisition companies, and limited partnerships are also ineligible
for inclusion. Bulletin board, pink sheets, and over-the-counter (“OTC”) traded securities are not eligible for inclusion.
Exchange traded funds and mutual funds are also excluded.
Annual reconstitution
is a process by which the RTY is completely rebuilt. Based on closing levels of the company’s common stock on its primary
exchange on the rank day of May of each year, FTSE Russell reconstitutes the composition of the RTY using the then existing market
capitalizations of eligible companies. Reconstitution of the RTY occurs on the last Friday in June or, when the last Friday in
June is the 29th or 30th, reconstitution occurs on the prior Friday. In addition, FTSE Russell adds initial public offerings to
the RTY on a quarterly basis based on total market capitalization ranking within the market-adjusted capitalization breaks established
during the most recent reconstitution. After membership is determined, a security’s shares are adjusted to include only those
shares available to the public. This is often referred to as “free float.” The purpose of the adjustment is to exclude
from market calculations the capitalization that is not available for purchase and is not part of the investable opportunity
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set.
Historical Performance of
the RTY
The following graph sets forth
the daily historical performance of the RTY in the period from January 1, 2008 through July 17, 2019. 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. The horizontal line in the graph represents its hypothetical Coupon Barrier and Threshold Value of 930.467 (rounded to three
decimal places), which is 60% of its hypothetical Starting Value of 1,550.778, which was its closing level on July 17, 2019. The
actual Starting Value, Coupon Barrier and Threshold Value will be determined on the pricing date.
This historical
data on the RTY is not necessarily indicative of the future performance of the RTY or what the value of the Notes may be. Any historical
upward or downward trend in the level of the RTY during any period set forth above is not an indication that the level of the RTY
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 RTY.
License Agreement
“Russell
2000
®
” and “Russell 3000
®
” are trademarks of FTSE Russell and have been licensed
for use by our affiliate, MLPF&S. The Notes are not sponsored, endorsed, sold, or promoted by FTSE Russell, and FTSE Russell
makes no representation regarding the advisability of investing in the Notes.
FTSE Russell
and MLPF&S have entered into a non-exclusive license agreement providing for the license to MLPF&S and its affiliates,
including us, in exchange for a fee, of the right to use indices owned and published by FTSE Russell in connection with some securities,
including the Notes. The license agreement provides that the following language must be stated in this pricing supplement:
The Notes
are not sponsored, endorsed, sold, or promoted by FTSE Russell. FTSE Russell makes 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 RTY to track general stock market performance or a segment of the same. FTSE Russell’s
publication of the RTY in no way suggests or implies an opinion by FTSE Russell as to the advisability of investment in any or
all of the securities upon which the RTY is based. FTSE Russell’s only relationship to MLPF&S and to us is the licensing
of certain trademarks and trade names of FTSE Russell and of the RTY, which is determined, composed, and calculated by FTSE Russell
without regard to MLPF&S, us, or the Notes. FTSE Russell is not responsible for and has not reviewed the Notes nor any associated
literature or publications and FTSE Russell makes no representation or warranty express or implied as to their accuracy or completeness,
or otherwise. FTSE Russell reserves the right, at any time and without notice, to alter, amend, terminate, or in any way change
the RTY. FTSE Russell has no obligation or liability in connection with the administration, marketing, or trading of the Notes.
FTSE RUSSELL
DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE RTY OR ANY DATA INCLUDED THEREIN AND FTSE RUSSELL SHALL HAVE NO
LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. FTSE RUSSELL MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS
TO BE OBTAINED BY MLPF&S, US, HOLDERS OF THE NOTES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE RTY OR ANY DATA INCLUDED
THEREIN. FTSE RUSSELL MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE RTY OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN
NO EVENT SHALL FTSE RUSSELL HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS),
EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
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Supplement to the Plan of Distribution; Role
of BofAS and Conflicts of Interest
BofAS, a broker-dealer
affiliate of ours, is a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”) and will participate
as selling agent in the distribution of the Notes. Accordingly, the offering of the Notes will conform to the requirements of FINRA
Rule 5121. BofAS may not make sales in this offering to any of its discretionary accounts without the prior written approval of
the account holder.
We expect
to 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, if the initial settlement
of the Notes occurs more than two business days from the pricing date, 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.
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 pricing supplement, less the indicated underwriting discount. BofAS will sell the Notes to other broker-dealers
that will participate in the offering and that are not affiliated with us, at an agreed discount to the principal amount. Each
of those broker-dealers may sell the Notes to one or more additional broker-dealers. BofAS has informed us that these discounts
may vary from dealer to dealer and that not all dealers will purchase or repurchase the Notes at the same discount. Certain dealers
who purchase the Notes for sale to certain fee-based advisory accounts may forgo some or all of their selling concessions, fees
or commissions. The public offering price for investors purchasing the Notes in these fee-based advisory accounts may be as low
as $997.50 per Note. In addition to the underwriting discount above, if any, an affiliate of BofA Finance will pay a referral fee
of up to $6.00 per $1,000 in principal amount of the Notes in connection with the distribution of the Notes to other registered
broker-dealers.
BofAS and
any of our other broker-dealer affiliates, may use this pricing supplement, and the accompanying product supplement, prospectus
supplement and prospectus for offers and sales in secondary market transactions and market-making transactions in the Notes. However,
they are not obligated to engage in such secondary market transactions and/or market-making transactions. The selling agent may
act as principal or agent in these transactions, and any such sales will be made at prices related to prevailing market conditions
at the time of the sale.
At BofAS’s
discretion, for a short, undetermined initial period after the issuance of the Notes, 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 BofAS for the Notes will be based
on then-prevailing market conditions and other considerations, including the performance of the Underlyings and the remaining term
of the Notes. However, none of us, the Guarantor, BofAS or any of our other affiliates is obligated to purchase your Notes at any
price or at any time, and we cannot assure you that any party will purchase your Notes at a price that equals or exceeds the initial
estimated value of the Notes.
Any price
that BofAS may pay to repurchase the Notes will depend upon then prevailing market conditions, the creditworthiness of us and the
Guarantor, and transaction costs. At certain times, this price may be higher than or lower than the initial estimated value of
the Notes.
No Prospectus
(as defined in Directive 2003/71/EC, as amended (the “Prospectus Directive”)) will be prepared in connection with these
Notes. Accordingly, these Notes may not be offered to the public in any member state of the European Economic Area (the “EEA”),
and any purchaser of these Notes who subsequently sells any of these Notes in any EEA member state must do so only in accordance
with the requirements of the Prospectus Directive, as implemented in that member state.
The Notes
are not intended to be offered, sold or otherwise made available to, and should not be offered, sold or otherwise made available
to, any retail investor in the EEA. For these purposes, the expression “offer" includes the communication in any form
and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to
decide to purchase or subscribe the Notes, and a “retail investor” means a person who is one (or more) of: (a) a retail
client, as defined in point (11) of Article 4(1) of Directive 2014/65/EU, as amended (“MiFID II”); or (b) a customer,
within the meaning of Insurance Distribution Directive 2016/97/EU, as amended, where that customer would not qualify as a professional
client as defined in point (10) of Article 4(1) of MiFID II; or (c) not a qualified investor as defined in the Prospectus Directive.
Consequently, no key information document required by Regulation (EU) No 1286/2014, as amended (the “PRIIPs Regulation”),
for offering or selling the Notes or otherwise making them available to retail investors in the EEA has been prepared, and therefore,
offering or selling the Notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs
Regulation.
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Structuring the Notes
The
Notes are our debt securities, the return on which is linked to the performance of the Underlyings. The related guarantee is BAC’s
obligation. 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, which we refer to in this pricing supplement as BAC’s internal funding rate,
that is more favorable to BAC than the rate that it might pay for a conventional fixed or floating rate debt security. 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, typically results in the initial estimated value of the Notes on the pricing date being less
than their public offering price.
In order
to meet our payment obligations on the Notes, 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 based upon terms provided by 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 Underlyings, the tenor of the Notes
and 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 hedging related charges, reflecting the costs associated with, and our
affiliates’ profit earned from, these hedging arrangements. Since hedging entails risk and may be influenced by unpredictable
market forces, actual profits or losses from these hedging transactions may be more or less than any expected amounts.
For
further information, see “Risk Factors” beginning on page PS-8 above and “Supplemental Use of Proceeds”
on page PS-16 of the accompanying product supplement.
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Index
U.S. Federal Income Tax Summary
The following summary of the material U.S.
federal income tax considerations of the acquisition, ownership, and disposition of the Notes supplements, and to the extent inconsistent
supersedes, the discussions under “U.S. Federal Income Tax Considerations” in the accompanying prospectus and under
“U.S. Federal Income Tax Considerations” in the accompanying prospectus supplement and is not exhaustive of all possible
tax considerations. In addition, any reference to “Morrison & Foerster LLP” in the aforementioned tax discussions
in the accompanying prospectus and prospectus supplement should be read as a reference to “Sidley Austin LLP.” This
summary is based upon the Internal Revenue Code of 1986, as amended (the “Code”), regulations promulgated under the
Code by the U.S. Treasury Department (“Treasury”) (including proposed and temporary regulations), rulings, current
administrative interpretations and official pronouncements of the IRS, and judicial decisions, all as currently in effect and all
of which are subject to differing interpretations or to change, possibly with retroactive effect. No assurance can be given that
the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences described below.
This summary does not include any description of the tax laws of any state or local governments, or of any foreign government,
that may be applicable to a particular holder.
Although the Notes are issued by us, they
will be treated as if they were issued by Bank of America Corporation for U.S. federal income tax purposes. Accordingly throughout
this tax discussion, references to “we,” “our” or “us” are generally to Bank of America Corporation
unless the context requires otherwise.
This summary is directed solely to U.S.
Holders and Non-U.S. Holders that, except as otherwise specifically noted, will purchase the Notes upon original issuance and will
hold the Notes as capital assets within the meaning of Section 1221 of the Code, which generally means property held for investment,
and that are not excluded from the discussion under “U.S. Federal Income Tax Considerations” in the accompanying prospectus.
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.
General
Although there is no statutory, judicial,
or administrative authority directly addressing the characterization of the Notes, we intend to treat the Notes for all tax purposes
as contingent income-bearing single financial contracts with respect to the Underlyings and under the terms of the Notes, we and
every investor in the Notes agree, in the absence of an administrative determination or judicial ruling to the contrary, to treat
the Notes in accordance with such characterization. In the opinion of our counsel, Sidley Austin LLP, it is reasonable to treat
the Notes as contingent income-bearing single financial contracts with respect to the Underlyings. However, Sidley Austin LLP has
advised us that it is unable to conclude that it is more likely than not that this treatment will be upheld. This discussion assumes
that the Notes constitute contingent income-bearing single financial contracts with respect to the Underlyings for U.S. federal
income tax purposes. If the Notes did not constitute contingent income-bearing single financial contracts, the tax consequences
described below would be materially different.
This characterization of the Notes is
not binding on the IRS or the courts. No statutory, judicial, or administrative authority directly addresses the characterization
of the Notes or any similar instruments for U.S. federal income tax purposes, and no ruling is being requested from the IRS with
respect to their proper characterization and treatment. Due to the absence of authorities on point, significant aspects of the
U.S. federal income tax consequences of an investment in the Notes are not certain, and no assurance can be given that the IRS
or any court will agree with the characterization and tax treatment described in this pricing supplement. Accordingly, you are
urged to consult your tax advisor regarding all aspects of the U.S. federal income tax consequences of an investment in the Notes,
including possible alternative characterizations.
Unless otherwise stated, the following
discussion is based on the characterization described above. The discussion in this section assumes that there is a significant
possibility of a significant loss of principal on an investment in the Notes.
We will not attempt to ascertain whether
any issuer of a component stock included in an Underlying would be treated as a “passive foreign investment company”
(“PFIC”), within the meaning of Section 1297 of the Code, or a United States real property holding corporation, within
the meaning of Section 897(c) of the Code. If the issuer of one or more stocks included in an Underlying were so treated, certain
adverse U.S. federal income tax consequences could possibly apply to a holder of the Notes. You should refer to information filed
with the SEC by the issuers of the component stocks included in the Underlyings and consult your tax advisor regarding the possible
consequences to you, if any, if any issuer of a component stock included in the Underlyings is or becomes a PFIC or is or becomes
a United States real property holding corporation.
U.S. Holders
Although the U.S. federal income tax treatment
of any Contingent Coupon Payment on the Notes is uncertain, we intend to take the position, and
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the following discussion assumes, that any Contingent Coupon Payment constitutes
taxable ordinary income to a U.S. Holder at the time received or accrued in accordance with the U.S. Holder’s regular method
of accounting. By purchasing the Notes you agree, in the absence of an administrative determination or judicial ruling to the contrary,
to treat any Contingent Coupon Payment as described in the preceding sentence.
Upon receipt of a cash payment at maturity
or upon a sale, exchange, or redemption of the Notes prior to maturity, a U.S. Holder generally will recognize capital gain or
loss equal to the difference between the amount realized (other than amounts representing any Contingent Coupon Payment, which
would be taxed as described above) and the U.S. Holder’s tax basis in the Notes. A U.S. Holder’s tax basis in the Notes
will equal the amount paid by that holder to acquire them. This capital gain or loss generally will be long-term capital gain or
loss if the U.S. Holder held the Notes for more than one year. The deductibility of capital losses is subject to limitations.
Alternative Tax Treatments
. Due
to the absence of authorities that directly address the proper tax treatment of the Notes, prospective investors are urged to consult
their tax advisors regarding all possible alternative tax treatments of an investment in the Notes. In particular, the IRS could
seek to subject the Notes to the Treasury regulations governing contingent payment debt instruments. If the IRS were successful
in that regard, the timing and character of income on the Notes would be affected significantly. Among other things, a U.S. Holder
would be required to accrue original issue discount every year at a “comparable yield” determined at the time of issuance.
In addition, any gain realized by a U.S. Holder at maturity or upon a sale, exchange, or redemption of the Notes generally would
be treated as ordinary income, and any loss realized at maturity or upon a sale, exchange, or redemption of the Notes generally
would be treated as ordinary loss to the extent of the U.S. Holder’s prior accruals of original issue discount, and as capital
loss thereafter.
In addition, it is possible that the Notes
could be treated as a unit consisting of a deposit and a put option written by the note holder, in which case the timing and character
of income on the Notes would be affected significantly.
The IRS released Notice 2008-2 (the “Notice”),
which sought comments from the public on the taxation of financial instruments currently taxed as “prepaid forward contracts.”
This Notice addresses instruments such as the Notes. According to the Notice, the IRS and Treasury are considering whether a holder
of an instrument such as the Notes should be required to accrue ordinary income on a current basis, regardless of whether any payments
are made prior to maturity. It is not possible to determine what guidance the IRS and Treasury will ultimately issue, if any. Any
such future guidance may affect the amount, timing and character of income, gain, or loss in respect of the Notes, possibly with
retroactive effect.
The IRS and Treasury are also considering
additional issues, including whether additional gain or loss from such instruments should be treated as ordinary or capital, whether
foreign holders of such instruments should be subject to withholding tax on any deemed income accruals, whether Section 1260 of
the Code, concerning certain “constructive ownership transactions,” generally applies or should generally apply to
such instruments, and whether any of these determinations depend on the nature of the underlying asset.
In addition, proposed Treasury regulations
require the accrual of income on a current basis for contingent payments made under certain notional principal contracts. The preamble
to the regulations states that the “wait and see” method of accounting does not properly reflect the economic accrual
of income on those contracts, and requires current accrual of income for some contracts already in existence. While the proposed
regulations do not apply to prepaid forward contracts, the preamble to the proposed regulations expresses the view that similar
timing issues exist in the case of prepaid forward contracts. If the IRS or Treasury publishes future guidance requiring current
economic accrual for contingent payments on prepaid forward contracts, it is possible that you could be required to accrue income
over the term of the Notes.
Because of the absence of authority regarding
the appropriate tax characterization of the Notes, it is also possible that the IRS could seek to characterize the Notes in a manner
that results in tax consequences that are different from those described above. For example, the IRS could possibly assert that
any gain or loss that a holder may recognize at maturity or upon the sale, exchange, or redemption of the Notes should be treated
as ordinary gain or loss.
Because each Underlying is an index that
periodically rebalances, it is possible that the Notes could be treated as a series of contingent income-bearing single financial
contracts, each of which matures on the next rebalancing date. If the Notes were properly characterized in such a manner, a U.S.
Holder would be treated as disposing of the Notes on each rebalancing date in return for new Notes that mature on the next rebalancing
date, and a U.S. Holder would accordingly likely recognize capital gain or loss on each rebalancing date equal to the difference
between the holder’s tax basis in the Notes (which would be adjusted to take into account any prior recognition of gain or
loss) and the fair market value of the Notes on such date.
Non-U.S. Holders
Because the U.S. federal income tax treatment
of the Notes (including any Contingent Coupon Payment) is uncertain, we will withhold U.S. federal income tax at a 30% rate (or
at a lower rate under an applicable income tax treaty) on the entire amount of any Contingent Coupon Payment made
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unless such payments are effectively connected with the conduct by the
Non-U.S. Holder of a trade or business in the U.S. (in which case, to avoid withholding, the Non-U.S. Holder will be required to
provide a Form W-8ECI). We will not pay any additional amounts in respect of such withholding. To claim benefits under an income
tax treaty, a Non-U.S. Holder must obtain a taxpayer identification number and certify as to its eligibility under the appropriate
treaty’s limitations on benefits article, if applicable. In addition, special rules may apply to claims for treaty benefits
made by Non-U.S. Holders that are entities rather than individuals. The availability of a lower rate of withholding under an applicable
income tax treaty will depend on whether such rate applies to the characterization of the payments under U.S. federal income tax
laws. A Non-U.S. Holder that is eligible for a reduced rate of U.S. federal withholding tax pursuant to an income tax treaty may
obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the IRS.
Except as discussed below, a Non-U.S. Holder
generally will not be subject to U.S. federal income or withholding tax for amounts paid in respect of the Notes (not including,
for the avoidance of doubt, amounts representing any Contingent Coupon Payment which would be subject to the rules discussed in
the previous paragraph) upon the sale, exchange or redemption of the Notes or their settlement at maturity, provided that the Non-U.S.
Holder complies with applicable certification requirements and that the payment is not effectively connected with the conduct by
the Non-U.S. Holder of a U.S. trade or business. Notwithstanding the foregoing, gain from the sale, exchange, or redemption of
the Notes or their settlement at maturity may be subject to U.S. federal income tax if that Non-U.S. Holder is a non-resident alien
individual and is present in the U.S. for 183 days or more during the taxable year of the sale, exchange, redemption, or settlement
and certain other conditions are satisfied.
If a Non-U.S. Holder of the Notes is engaged
in the conduct of a trade or business within the U.S. and if any Contingent Coupon Payment and gain realized on the settlement
at maturity, or upon sale, exchange, or redemption of the Notes, is effectively connected with the conduct of such trade or business
(and, if certain tax treaties apply, is attributable to a permanent establishment maintained by the Non-U.S. Holder in the U.S.),
the Non-U.S. Holder, although exempt from U.S. federal withholding tax, generally will be subject to U.S. federal income tax on
such Contingent Coupon Payment and gain on a net income basis in the same manner as if it were a U.S. Holder. Such Non-U.S. Holders
should read the material under the heading “—U.S. Holders,” for a description of the U.S. federal income tax
consequences of acquiring, owning, and disposing of the Notes. In addition, if such Non-U.S. Holder is a foreign corporation, it
may also be subject to a branch profits tax equal to 30% (or such lower rate provided by any applicable tax treaty) of a portion
of its earnings and profits for the taxable year that are effectively connected with its conduct of a trade or business in the
U.S., subject to certain adjustments.
A “dividend equivalent” payment
is treated as a dividend from sources within the United States and such payments generally would be subject to a 30% U.S. withholding
tax if paid to a Non-U.S. Holder. Under Treasury regulations, payments (including deemed payments) with respect to equity-linked
instruments (“ELIs”) that are “specified ELIs” may be treated as dividend equivalents if such specified
ELIs reference an interest in an “underlying security,” which is generally any interest in an entity taxable as a corporation
for U.S. federal income tax purposes if a payment with respect to such interest could give rise to a U.S. source dividend. However,
IRS guidance provides that withholding on dividend equivalent payments will not apply to specified ELIs that are not delta-one
instruments and that are issued before January 1, 2021. Based on our determination that the Notes are not delta-one instruments,
Non-U.S. Holders should not be subject to withholding on dividend equivalent payments, if any, under the Notes. However, it is
possible that the Notes could be treated as deemed reissued for U.S. federal income tax purposes upon the occurrence of certain
events affecting the Underlyings or the Notes, and following such occurrence the Notes could be treated as subject to withholding
on dividend equivalent payments. Non-U.S. Holders that enter, or have entered, into other transactions in respect of the Underlyings
or the Notes should consult their tax advisors as to the application of the dividend equivalent withholding tax in the context
of the Notes and their other transactions. If any payments are treated as dividend equivalents subject to withholding, we (or the
applicable paying agent) would be entitled to withhold taxes without being required to pay any additional amounts with respect
to amounts so withheld.
As discussed above, alternative characterizations
of the Notes for U.S. federal income tax purposes are possible. Should an alternative characterization, by reason of change or
clarification of the law, by regulation or otherwise, cause payments as to the Notes to become subject to withholding tax in addition
to the withholding tax described above, tax will be withheld at the applicable statutory rate. Prospective Non-U.S. Holders should
consult their own tax advisors regarding the tax consequences of such alternative characterizations.
U.S. Federal Estate Tax.
Under current
law, while the matter is not entirely clear, individual Non-U.S. Holders, and entities whose property is potentially includible
in those individuals’ gross estates for U.S. federal estate tax purposes (for example, a trust funded by such an individual
and with respect to which the individual has retained certain interests or powers), should note that, absent an applicable treaty
benefit, a note is likely to be treated as U.S. situs property, subject to U.S. federal estate tax. These individuals and entities
should consult their own tax advisors regarding the U.S. federal estate tax consequences of investing in a note.
Backup Withholding and Information Reporting
Please see the discussion under “U.S.
Federal Income Tax Considerations — Taxation of Debt Securities — Backup Withholding and Information Reporting”
in the accompanying prospectus for a description of the applicability of the backup withholding and information reporting rules
to
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payments made on the Notes.
Foreign Account Tax Compliance Act (“FATCA”)
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 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. Treasury has indicated
that taxpayers may rely on these proposed regulations pending their finalization.
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Where You Can Find More Information
The terms and risks of the Notes are
contained in this pricing supplement and in the following related product supplement, prospectus supplement and prospectus, which
can be accessed at the following links:
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•
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Product
Supplement EQUITY-1 dated January 24, 2017:
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https://www.sec.gov/Archives/edgar/data/70858/000119312517016445/d331325d424b5.htm
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 or obtained from BofAS by calling 1-800-294-1322. Before you invest, you should read the Note
Prospectus, including this pricing supplement, 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 pricing supplement have the meanings set forth in the accompanying product supplement or prospectus 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.
As a result
of the completion of the reorganization of Bank of America’s U.S. broker-dealer business, references to MLPF&S in the
accompanying product supplement EQUITY-1, prospectus supplement and prospectus, as such references relate to MLPF&S’s
institutional services, should now be read as references to BofAS.
The Notes
are our senior debt securities. Any 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 our other senior unsecured debt, and the related guarantee will rank equally with all of BAC’s
other senior unsecured debt. Any payments due on the Notes, including any repayment of the principal amount, will be subject to
the credit risk of BofA Finance, as issuer, and BAC, as guarantor.
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