Feb. 2 (Bloomberg) -- Bondholders offered to sell back $3.59 billion of subordinated debt to Bank of America Corp., more than twice the amount it is seeking, as the second-biggest U.S. lender by assets cuts debt and bolsters capital.
Bank of America, which proposed to buy $1.5 billion of the securities, may raise that amount, the Charlotte, North Carolina-based bank said today in a statement. Yesterday was the early tender deadline, which included a payment of 3 percent of face value. The offer expires Feb. 15.
Bank of America is reducing more expensive long-term debt as Chief Executive Officer Brian T. Moynihan seeks to cut holdings, expenses and staff while raising capital to meet demands from regulators for a larger cushion against losses. The bonds that the bank is seeking to buy back are denominated in euros, pounds and Canadian and U.S. dollars with interest rates as high as 8.125 percent. The average yield on investment-grade bank debt is 4.06 percent, Bank of America Merrill Lynch index data show.
The bank is marketing dollar-denominated bonds today in benchmark size, typically at least $500 million, with an add-on to 5.7 percent notes due in 2022 and new 30-year debt, said a person with knowledge of the offering, who declined to be identified because terms aren’t set.
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