Summary
Bank of America Corporation (BAC) filed an 8-K on January 13, 2012, to disclose material modifications to the rights of security holders related to its Junior Subordinated Notes. Specifically, BAC entered into two supplemental indentures (Eighteenth and Nineteenth) to its Restated Junior Subordinated Debt Securities Indenture. These modifications primarily concern upcoming remarketings of its Remarketable Floating Rate Junior Subordinated Notes due 2043 and Remarketable Fixed Rate Junior Subordinated Notes due 2043. The key investor takeaway is that BAC intends to repurchase and retire all of the Junior Subordinated Notes being remarketed. Additionally, the caps on the interest rate reset for these notes in the upcoming remarketings have been eliminated, meaning the interest rates can adjust without a pre-defined upper limit. This action impacts the structure of these specific debt instruments and is being communicated to holders of related Preferred Hybrid Income Term Securities (Preferred HITS).
Key Highlights
- 1BAC entered into Eighteenth and Nineteenth Supplemental Indentures on January 12, 2012, modifying its Junior Subordinated Debt Securities Indenture.
- 2These modifications are related to upcoming remarketings of Remarketable Floating Rate Junior Subordinated Notes due 2043 and Remarketable Fixed Rate Junior Subordinated Notes due 2043.
- 3The company expects to repurchase and retire all Junior Subordinated Notes included in the upcoming remarketings.
- 4Interest rate caps on the remarketings of both the Floating Rate and Fixed Rate Junior Subordinated Notes have been eliminated.
- 5The elimination of interest rate caps means the applicable interest rate can reset without a predefined upper limit during the remarketing period.
- 6Holders of BAC Capital Trust XIII Preferred HITS and BAC Capital Trust XIV Preferred HITS will be notified of these changes and the expected repurchase.