Bank of America Corp. (BAC:US) sold $108.5 million of five-year structured notes tied to the Standard & Poor’s 500 Index, its largest offering since November.
The securities, issued April 25, yield at least 23.4 percent a year if the benchmark doesn’t fall below its initial value and protect against 20 percent of losses, according to a prospectus filed with the U.S. Securities and Exchange Commission. The Charlotte, North Carolina-based bank distributed the notes, which it valued at 94.9 cents on the dollar, for a 2.5 percent fee.
Bank of America has sold $1.58 billion of U.S. structured notes this year in 51 offerings, a decline of 25 percent from the year-earlier period and its slowest first four months since 2010, according to data that Bloomberg started compiling then.
Its average offering size this year is $30.9 million, the most of any bank that sells the products in the U.S., Bloomberg data show. That compares with $820,000 for UBS AG, which has the smallest average and offers an electronic sales platform to improve efficiency and cut costs.
Matt Card, a spokesman for the bank, didn’t respond to phone and e-mail requests for comment on the deal or total sales.
Bank of America issued $123.9 million of two-year securities also linked to the S&P 500 on Nov. 29, its most recent offering that was larger.
The April note is the second biggest of the year tied to the S&P 500, Bloomberg data show. Morgan Stanley sold $110 million of 15-year securities linked to the stock benchmark on Jan. 15, according to a prospectus filed with the SEC.
Banks create structured notes by packaging debt with derivatives to offer customized bets to retail investors while earning fees and raising money. Derivatives are contracts whose value is derived from stocks, bonds, commodities and currencies, or events such as changes in interest rates or the weather.
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