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BofA Finance LLC, fully guaranteed by Bank of America Corporation, announced the launch of Enhanced Return Notes tied to the performance of three equity benchmarks in a preliminary pricing filing dated July 22, 2026. These approximately four-year notes, anticipated to price on July 23, 2026, and issue on July 28, 2026, provide structured exposure to the S&P 500 Equal Weight Index, the S&P 500 Index, and the iShares S&P 500 Growth ETF. Investors face both upside participation and downside risk linked to the lowest-performing underlying asset, with potential capital loss if any benchmark falls more than 30% below its initial value.
Key Highlights
- NYSE: MER-PK
- BofA Finance LLC launches Enhanced Return Notes linked to S&P 500 Equal Weight Index, S&P 500 Index, and iShares S&P 500 Growth ETF, maturing July 26, 2030
- Expected pricing on July 23, 2026, at $1,000 per unit with a $2 underwriting discount; issuance on July 28, 2026; roughly four-year maturity
- Upside participation of 154.50% if all underlyings close above starting values; downside risk capped at a 30% decline threshold with 1:1 exposure below that level
Note Structure and Payoff Details
The Enhanced Return Notes are structured to offer leveraged upside exposure to a basket of three equity indices and ETFs while limiting downside protection to a defined threshold. If the least-performing underlying closes above its initial value on the valuation date, investors receive 154.50% of the gains on that benchmark. This means for every 1% increase in the best-performing underlying, note holders gain 1.545% in return.
Redemption varies based on performance: if the lowest-performing underlying finishes between 70% and 100% of its starting value, investors receive full principal ($1,000 per note). However, if any underlying drops more than 30% (below 70% of its initial level), investors bear full downside risk on a 1:1 basis, potentially losing their entire principal. This asymmetric payoff highlights the inherent risk-return tradeoff.
Tracked Underlying Assets
The notes track three related US equity benchmarks with distinct investment profiles. The S&P 500 Equal Weight Index (Bloomberg: SPW) offers equal weighting across large-cap stocks, differing from the market-cap weighted S&P 500 Index (Bloomberg: SPX). The iShares S&P 500 Growth ETF (Bloomberg: IVW) targets growth-focused companies within the S&P 500.
Performance measurement starts on July 23, 2026, using closing levels for indices and ETF prices to set baseline values. The valuation date is July 23, 2030, subject to postponement under certain conditions. The final return depends on the weakest performing underlying, adding complexity as investors benefit from the strongest performer but face risk tied to the weakest.
Issuance and Pricing Details
BofA Finance LLC is offering the notes at $1,000 each in minimum increments of $1,000. The underwriting discount is $2 per $1,000 principal, resulting in net proceeds of $998 before expenses. Fee-based advisory accounts may see reduced selling concessions, lowering effective purchase price to $998, matching net proceeds.
The notes’ initial estimated value at pricing is between $935 and $985 per $1,000, reflecting discounts due to internal funding costs, underwriting fees, and hedging expenses. This valuation gap indicates the complex and uncertain economic value embedded in the structured product.
Credit Guarantee and Risk Considerations
Bank of America Corporation fully and unconditionally guarantees all payment obligations of the Enhanced Return Notes issued by BofA Finance LLC. Investors rely on Bank of America’s creditworthiness for repayment, exposing them to the credit risk of both issuer and guarantor. The guarantee addresses counterparty risk but does not alter the notes’ economic performance.
In the event of default, redemption amounts are calculated as if the acceleration date were the maturity date, with no default interest paid on delayed amounts. Investors receive only the calculated redemption amount without additional compensation.
Risk Factors and Potential Capital Loss
These notes carry risks uncommon to traditional debt securities. The primary risk is performance-based: if the lowest-performing underlying falls more than 30% below its initial value, investors incur dollar-for-dollar losses, potentially losing their entire $1,000 principal. This 100% capital loss exposure surpasses typical bond risk.
Additional risks include illiquidity, as the notes are not exchange-listed, requiring investors to hold to maturity in 2030. The investment also carries full credit risk of Bank of America Corporation and is not FDIC insured or bank guaranteed, differentiating it from bank deposits.
Economic and Pricing Structure
The notes’ economic foundation is based on Bank of America’s internal funding rate, which is generally lower than rates for conventional debt issuance. This funding advantage, combined with underwriting discounts and hedging costs, creates the difference between the $1,000 offering price and the initial estimated value range of $935 to $985.
Investors pay this premium for structured upside participation and downside protection. The embedded hedging costs borne by Bank of America’s affiliates reduce economic value, requiring investors to evaluate if the 154.50% upside adequately compensates for downside risk and fees.
Calculation Agent and Administration
BofA Securities, Inc., an affiliate of BofA Finance LLC, acts as calculation and selling agent. It determines starting and ending values of underlyings, calculates the least-performing asset’s performance, and computes final redemption amounts. This affiliation may present conflicts of interest in valuation.
Starting values are set using closing prices on pricing date; ending values use closing prices on valuation date, July 23, 2030. For the iShares S&P 500 Growth ETF, ending values are multiplied by a price multiplier of 1, adjustable for corporate events per anti-dilution provisions.
Regulatory Filings and Compliance
The Enhanced Return Notes are registered under Securities Act registration numbers 333-290665 and 333-290665-01, with a preliminary pricing supplement filed under Rule 424(b)(2) on July 22, 2026. The SEC and other regulators have neither approved nor disapproved the securities, and no assurance is given regarding the offering materials’ accuracy.
The preliminary pricing supplement indicates terms are subject to finalization. The CUSIP 09712G6Q2 identifies the securities uniquely. Investors should review final prospectus materials for confirmed pricing and operational details post-pricing.
Key Dates and Timeline
Important dates include pricing on July 23, 2026, when starting values are fixed; issuance on July 28, 2026, when exposure begins; valuation on July 23, 2030, when ending values are determined; and maturity on July 26, 2030, when redemption payments are made. Dates may be postponed under certain conditions such as market disruptions.
Investor Suitability and Considerations
These Enhanced Return Notes are complex, requiring investors to understand multiple risk-return layers. The 154.50% upside participation offers leveraged gains only if all three underlyings finish above starting values. More commonly, at least one will decline, focusing returns on the weakest performer.
The four-year lockup, lack of periodic interest, and absence of secondary market liquidity make these notes appropriate for investors with long-term horizons and no liquidity needs before 2030. The potential for total principal loss if the lowest-performing underlying drops over 30% presents significant downside risk. Prospective investors must fully comprehend the payoff structure and be financially prepared for the possibility of losing their entire investment without jeopardizing overall financial health.
