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BofA Finance LLC announced its intention to issue Contingent Income Issuer Callable Yield Notes maturing on July 29, 2031, with pricing anticipated on July 24, 2026, as per a filing dated July 23, 2026. These notes, guaranteed by Bank of America Corporation, are tied to the performance of three ETFs: Global X Uranium ETF, State Street Real Estate Select Sector SPDR ETF, and State Street Financial Select Sector SPDR ETF. Investors can earn a quarterly contingent coupon of 4.075% if all three ETFs maintain values above 70% of their initial levels, though the notes carry significant downside risk linked to the worst-performing ETF among the trio.
Key Highlights
- Trading symbol: NYSE: MER-PK (BofA Finance LLC, guaranteed by Bank of America Corporation)
- Contingent Income Issuer Callable Yield Notes expected to price on July 24, 2026, and issue on July 29, 2026, with a roughly five-year maturity
- Public offering price set at $1,000 per note with an underwriting discount of $41.25; initial estimated value ranges between $850 and $920 per note
- Quarterly contingent coupon of 4.075% (16.30% annualized) payable only if each underlying ETF’s observation value remains at or above 70% of its starting value; investors face 1:1 downside exposure to the lowest-performing ETF if it declines more than 40% from its initial value
Pricing Details and Offering Terms for the Five-Year Notes
The filing provides preliminary pricing information for the Contingent Income Notes, scheduled to price on July 24, 2026, and issue on July 29, 2026. The public offering price is $1,000 per note, with an underwriting discount of $41.25, resulting in net proceeds of $958.75 per note before expenses. The initial estimated value at pricing is expected between $850 and $920 per $1,000 principal amount, reflecting market conditions and the contingent coupon structure at issuance.
Notes will be issued in minimum denominations of $1,000 and multiples thereof, making them accessible to institutional and qualified retail investors. Pricing adjustments may apply for fee-based advisory accounts where selling concessions might be waived, allowing prices as low as $958.75 per $1,000 principal. Additionally, a referral fee of up to $5 per $1,000 principal may be paid to registered broker-dealers involved in distribution, representing additional compensation within the sales chain.
Contingent Coupon Linked to Three ETFs
The notes’ quarterly coupon of $40.75 per $1,000 principal (4.075% quarterly, 16.30% annualized) is payable only if all three underlying ETFs’ observation values are equal to or exceed 70% of their initial values on each observation date. This "all-or-nothing" condition means that if any one ETF falls below the 70% threshold, no coupon will be paid for that quarter, regardless of the other ETFs’ performance. The starting value for each ETF is based on its closing price on the July 24, 2026 pricing date.
Observation values are calculated using closing prices on scheduled quarterly observation dates, multiplied by a price multiplier of 1 for each ETF, subject to adjustment for certain corporate events. This structure provides diversified exposure across uranium, real estate, and financial sectors but concentrates coupon risk on all three ETFs simultaneously, distinguishing these notes from traditional debt instruments.
Issuer’s Optional Early Redemption Starting Year Two
Beginning July 29, 2027, one year after issuance, BofA Finance may redeem all outstanding notes on any quarterly coupon payment date if all ETFs’ observation values meet or exceed the 70% coupon barrier. The early redemption amount equals $1,000 per note plus the applicable coupon. The issuer must notify the trustee at least five business days, but no more than 60 calendar days, prior to the call date.
This early redemption feature allows BofA Finance to manage exposure amid favorable market or interest rate changes. Upon redemption, no further payments are due, effectively ending the investment. Investors face reinvestment risk, as notes may be called when alternative yields are lower.
Downside Risk and Maturity Redemption Terms
At maturity on July 29, 2031, if the notes are not called earlier, redemption depends on the lowest-performing ETF. If the least-performing ETF’s ending value is at least 60% of its starting value, investors receive full principal ($1,000 per note). If it falls below 60%, investors incur dollar-for-dollar losses on the principal based on that ETF’s decline.
Investors may lose up to 100% of principal if the worst-performing ETF declines significantly. A final contingent coupon is payable at maturity only if the least-performing ETF’s value is at or above 70% of its starting value, meaning investors could simultaneously lose principal and forgo coupon payments in adverse market scenarios. This risk concentration on the worst-performing ETF differentiates these notes from conventional fixed-income products.
Underlying ETFs Cover Uranium, Real Estate, and Financial Sectors
The notes are linked to the Global X Uranium ETF (Bloomberg: URA), State Street Real Estate Select Sector SPDR ETF (Bloomberg: XLRE), and State Street Financial Select Sector SPDR ETF (Bloomberg: XLF). These ETFs provide exposure to commodity, real estate, and financial sectors, offering diversification but increasing the likelihood that one ETF may underperform over the five-year term. The filing does not disclose historical correlations but highlights the "least performing" underlying as the key risk driver.
Valuations use closing market prices on observation dates with a price multiplier of 1, subject to adjustments for anti-dilution and corporate actions detailed in the product supplement. These provisions protect against structural changes in the ETFs that could affect valuation.
Credit Risk Tied to Bank of America Corporation
All payments—including principal, coupons, and early redemption amounts—are subject to the credit risk of BofA Finance LLC as issuer and Bank of America Corporation as unconditional guarantor. While payments are fully guaranteed by Bank of America, the notes are not FDIC insured or bank guaranteed, meaning investors bear credit risk.
BofA Securities, Inc., an affiliate of BofA Finance, serves as calculation agent and selling agent, centralizing valuation and distribution functions within the Bank of America group. Investors rely on the issuer’s internal controls to ensure accurate pricing and payment throughout the term.
Registration and Regulatory Compliance
The filing is made under Rule 424(b)(2) of the Securities Act of 1933, referencing Registration Statement Nos. 333-290665 and 333-290665-01. The pricing supplement cites effective prospectus documents dated December 8, 2025, enabling issuance under existing registration without new filings. The document is marked "Preliminary Pricing Supplement—Subject to Completion," indicating terms may be updated before final SEC filing.
Regulatory disclaimers note that the SEC and other authorities have not approved or disapproved the securities, emphasizing the preliminary nature of the offering and the importance of reviewing final documentation before investing.
Product Risks and Structural Complexity
The notes differ significantly from conventional debt securities, with risk factors detailed in the pricing supplement and prospectus. The contingent coupon creates uncertainty in income payments, while the "least performing underlying" feature concentrates risk on the worst-performing ETF. The optional early redemption exposes investors to reinvestment risk if notes are called when yields are low.
The initial estimated value discount (between $850 and $920 versus $1,000 par) reflects market expectations of coupon payment uncertainty and potential principal loss due to ETF performance deterioration.
Trading and Liquidity Considerations
The notes will not be listed on any securities exchange, limiting liquidity and secondary market transparency. Investors seeking to exit prior to maturity or call must transact over-the-counter, potentially facing wider bid-ask spreads and less price transparency.
The notes’ CUSIP is 09712G6B5, facilitating identification in clearing systems and secondary trading through intermediaries. The filing does not specify offering size or liquidity support, so investors should anticipate limited market depth and negotiated pricing when selling before maturity.
