On Thursday, Bloomberg reported that Bank of America Corporation (BAC) is in the process of redeeming step-coupon notes having maturity value of $3.698 million. The notes, having their maturity date on February 15, 2014, command a full redemption price.
Apart from BofA, a few other banks including Barclays Plc (BCS) and Morgan Stanley (MS) have also started redeeming variable notes this week. Barclays started the process of redemption of variable notes due 2021, with the maturity value of $4.85 million. Similarly, Morgan Stanley also started redeeming variable notes due 2023, with maturity value of $20 million.
Estimate Revision Trends
Over the last 30 days, 7 out of the 20 analysts covering BofA have lowered their estimates for the fourth quarter, while 4 moved north. For fiscal 2011, none of the analysts has lowered the estimate, while 9 out of 14 analysts revised their estimates upward over the last 30 days.
Currently, the Zacks Consensus earnings estimate for the fourth quarter is 15 cents per share, up 275.0% from the prior-year quarter.
In Conclusion
BofA has been selling its non-core assets to boost its capital position and strengthen the balance sheet in order to reinstate dividend hike and meet Basel III capital requirements, without diluting shareholder value. BofA plans to concentrate on businesses that directly serve customers, as well as fortify its balance sheet.
At this point, the redemption of variable notes would add to BofA’s financial flexibility. Besides, the company’s efforts to enhance liquidity will also support its growth plans.
BofA currently retains a Zacks #3 Rank, which implies a short-term ‘Hold’ rating. Also, considering the company’s fundamentals, we maintain a long-term Neutral” recommendation on the shares.
BANK OF AMER CP (BAC): Free Stock Analysis Report
BARCLAY PLC-ADR (BCS): Free Stock Analysis Report
MORGAN STANLEY (MS): Free Stock Analysis Report
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