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On July 20, 2026, BofA Finance LLC filed a pricing supplement for new Contingent Income Issuer Callable Yield Notes maturing August 2, 2029, fully guaranteed by Bank of America Corporation. These notes are linked to the Nasdaq-100, Russell 2000, and S&P 500 indices, offering an 11.00% per annum contingent coupon payable monthly under certain conditions. This structured equity-linked product exposes investors to full downside risk if any underlying index falls more than 30% from its initial level.
Key Points
- NYSE: MER-PK
- BofA Finance LLC issued preliminary pricing for three-year Contingent Income Issuer Callable Yield Notes with an 11.00% per annum contingent coupon
- Pricing expected on July 30, 2026, with issuance on August 4, 2026, and maturity on August 2, 2029
- Public offering price set at $1,000 per note, with an $8 underwriting discount; initial estimated value between $930 and $980 per note
- Full principal repayment at maturity if all indices stay above 70% of starting values; otherwise, investors face up to 100% principal loss
- Notes callable monthly from August 4, 2027, at issuer’s option for principal plus applicable contingent coupon
Equity-Linked Note Structure and Contingent Coupon Details
BofA Finance LLC’s Contingent Income Issuer Callable Yield Notes are structured debt securities guaranteed by Bank of America Corporation. The notes pay an 11.00% annual contingent coupon, distributed monthly at 0.9167%, only if the Nasdaq-100, Russell 2000, and S&P 500 indices each close at or above 70% of their initial levels on monthly observation dates. The starting values are based on the closing prices on July 30, 2026. This creates a conditional income stream requiring all three indices to simultaneously meet the coupon barrier.
With an approximate three-year maturity from August 4, 2026, to August 2, 2029, the notes may be redeemed early at the issuer’s discretion. Coupon payments are contingent on all indices maintaining the 70% threshold monthly; failure of any index to meet this level results in no coupon for that month. There are twelve monthly observation dates annually plus a final contingent coupon at maturity if all indices exceed the barrier.
Pricing and Initial Valuation Overview
The notes have a public offering price of $1,000 per note, sold in minimum denominations of $1,000 and multiples thereof. After an $8 underwriting discount, BofA Finance LLC receives $992 per $1,000 principal. Dealers selling to fee-based advisory accounts may reduce the purchase price to as low as $992. Additionally, BofA Finance’s affiliate offers referral fees up to $3 per $1,000 principal to participating registered broker-dealers.
The initial estimated value at pricing is between $930 and $980 per $1,000 principal, reflecting a discount to the offering price. The notes carry CUSIP 09712CRL9 and will not be listed on any exchange, limiting secondary market liquidity and trading opportunities.
Downside Exposure and Principal Protection at Maturity
Investors face substantial downside risk: if any underlying index declines more than 30% from its starting value by maturity, redemption will be based on the worst-performing index’s return, potentially resulting in principal loss up to 100%. The redemption amount, excluding the final contingent coupon, could fall below 70% of principal if the least performing index ends below the 70% threshold.
If all three indices remain at or above 70% of their initial levels at maturity, investors receive full principal ($1,000 per note) plus a final contingent coupon payment. The principal repayment depends on the least performing index, meaning poor performance in one index can negate coupon payments and reduce principal protection despite others performing well.
Issuer’s Early Redemption Rights and Call Features
Starting August 4, 2027, BofA Finance LLC may redeem all notes monthly at its option, paying principal plus any applicable contingent coupon if all indices meet or exceed the 70% barrier on the observation date. Notice must be given to the trustee between five business days and 60 calendar days before the call date. Early redemption terminates the notes, ceasing further payments.
This call feature allows the issuer to manage interest rate risk and redeem notes if market conditions become unfavorable. Investors face reinvestment risk due to potential early redemption. The call applies to all outstanding notes, with monthly opportunities throughout the three-year term.
Credit Risk and Guarantee Structure
Payments on the notes, including principal and contingent coupons, depend on the creditworthiness of BofA Finance LLC and Bank of America Corporation, which provides an unconditional guarantee. While backed by a systemically important financial institution, credit risk remains, and investors become unsecured creditors in default scenarios.
These notes are neither FDIC-insured nor bank-guaranteed despite issuance by a banking affiliate. Redemption amounts in default are calculated as if acceleration occurred on the maturity date, with prorated final coupon payments reflecting the actual period.
Underlying Indices and Least Performing Index Methodology
The notes are linked to the Nasdaq-100 (NDX), Russell 2000 (RTY), and S&P 500 (SPX) price return indices, representing large-cap technology/growth, small-cap stocks, and broad large-cap equities respectively. Returns exclude dividends.
The least performing underlying index determines principal repayment at maturity, while all three indices must meet the coupon barrier for coupon payments. This "worst of" structure means one weak index can eliminate coupons and reduce principal protection despite other indices performing well.
Regulatory Filing and Registration Details
BofA Finance LLC filed the pricing supplement on July 20, 2026, under SEC Rule 424(b)(2), supplementing registration statements 333-290665 and 333-290665-01. It supplements prospectuses dated December 8, 2025, including Product Supplement EQUITY-1. Terms remain subject to finalization before pricing and issuance.
The SEC and other regulators have neither approved nor disapproved these securities or confirmed the completeness of the documents. This highlights the complexity of structured notes and their regulatory status without full governmental endorsement or investor protections typical of registered securities.
Valuation and Calculation Agent Responsibilities
BofA Securities, Inc., an affiliate of BofA Finance LLC, acts as calculation agent, determining valuation dates, observation values, coupon payments, and redemption amounts. The final valuation date is July 30, 2029, with monthly observations throughout the term. Starting values are set on July 30, 2026.
The least performing index is identified by comparing returns from starting to ending values. The calculation agent affiliation may present conflicts of interest, with no disclosed independent verification or dispute resolution processes.
Market Context and Investor Considerations
The July 20, 2026 issuance reflects issuer strategy amid prevailing market conditions. The 11.00% contingent coupon compensates for risks including payment contingency, downside exposure, credit risk, and illiquidity. The discount between offering price and estimated value accounts for embedded options and risks.
Investors should note that coupon payments may be zero if any index falls below the barrier on observation dates. Potential total capital loss aligns these notes closer to equity risk than traditional fixed income. Monthly observations and call dates introduce ongoing valuation uncertainty. Lack of exchange listing limits liquidity and exit options before maturity or early call.
