BofA Finance LLC has set preliminary terms for auto-callable market-linked securities offering a Contingent Coupon Rate of at least 19.50% per annum, with payments and principal exposure determined by the lowest-performing of Alnylam Pharmaceuticals, UnitedHealth Group and Eli Lilly shares. The structure uses a 60.00% Coupon Barrier and a 60.00% Threshold Price, while Bank of America Corporation fully and unconditionally guarantees payments on the securities.
The product is formally described as Market Linked Securities—Auto-Callable with Contingent Coupon with Memory Feature and Contingent Downside. Unlike conventional debt, it does not provide fixed interest payments or guarantee repayment of a fixed amount of principal at maturity. Monthly coupon entitlement, potential early redemption and the ultimate principal payment instead depend on whichever Underlying Stock has the lowest Performance Factor on the relevant Calculation Day.
That lowest-performing mechanism means strength in one Underlying Stock cannot offset weakness in another. The Performance Factor measures each stock’s closing price as a percentage of its Starting Price. If the Lowest Performing Underlying Stock is at or above its 60.00% Coupon Barrier on a Calculation Day, a Contingent Coupon Payment is payable. If it falls below the barrier, that month’s coupon is not paid.
The Memory Feature can restore missed payments. If a later Calculation Day finds the Lowest Performing Underlying Stock back at or above its Coupon Barrier, the investor receives the current coupon plus previously unpaid Contingent Coupon Payments, although no interest is added to the deferred amounts. If the stock remains below the barrier through the Final Calculation Day, the unpaid coupons are not recovered.
The securities also contain an Automatic Call mechanism. From December 2026 to August 2029, inclusive, they will be called early if the Lowest Performing Underlying Stock is at or above its Starting Price on a qualifying monthly Calculation Day. The investor then receives the $1,000 principal amount, the applicable final Contingent Coupon Payment and any previously unpaid coupons, after which no further payments are due. The earliest possible automatic call is approximately three months after issuance.
If the securities remain outstanding until the September 28, 2029 Final Calculation Day, the 60.00% Threshold Price determines the treatment of principal. A Lowest Performing Underlying Stock ending at or above that level results in repayment of the $1,000 principal amount. If it finishes below the Threshold Price, the maturity payment becomes $1,000 multiplied by that stock’s Performance Factor. Under that condition, the terms state that investors would lose more than 40% and could lose all of their principal. The stated Maturity Date is October 3, 2029.
The potential coupon therefore sits alongside contingent income and contingent principal protection. BofA Finance states that higher Contingent Coupon Rates are associated with greater expected risk, with volatility and correlation among the Underlying Stocks affecting both the possible coupon level and the probability of missed payments or principal loss. Investors also receive no participation in appreciation of the Underlying Stocks and no dividends from them.
The preliminary economics also create a valuation gap at issuance. Each Security has a public offering price of $1,000, while its initial estimated value on the Pricing Date is expected to be between $920.00 and $970.00. BofA Securities and Wells Fargo Securities are selling agents, and the securities will not be listed on an exchange. All payments remain subject to the credit risk of BofA Finance and Bank of America Corporation.
The terms remain preliminary ahead of the September 30, 2026 Pricing Date, when the final Contingent Coupon Rate and Starting Prices will be determined. Those values will establish the final barriers governing monthly income, automatic redemption and potential principal loss across the structure.
