Last week, Bank of America Corporation (BAC) sold 3-year Uridashi notes in Australian dollars as well in South African Rand (ZAR). Uridashi notes are debt issued in the euro markets and are sold mostly to the Japanese individual investors.
BofA sold the 3- year issue worth 413.8 million Rand ($61.1 million). The notes were sold at a coupon rate of 7.05%, which are expected to increase by 10 basis points after December 27, 2011 till maturity. The bonds will mature on June 27, 2014.
Besides, BofA also sold 3- year issue worth A$ 218 million ($232.1 million). The notes were sold at a coupon rate of 5.32%, which would increase by 10 basis points after December 27, 2011 till maturity. The bonds are scheduled to mature on June 27, 2014.
Previously in May 2011, BofA sold $2.3 billion (EUR 1.6 billion) worth of notes in two parts. Moody, a rating arm of Moody’s Corp. (MCO), rated the notes A2, S&P rated A and Fitch rated A+.
In the first part, BofA sold notes worth $2 billion at a spread of 185 basis points over Treasuries to yield 5.056%. The issue was priced at 99.565% with a coupon rate of 5%. The notes will mature on 13 May, 2021.
The second part amounted to $300 million at an issue price of 101.356%. The notes carry a floating rate coupon of three-month LIBOR plus 142 basis points. The maturity date of the notes is January 30, 2014 and will pay a yield equal to three-month Libor plus 92 basis points.
The proceeds from the offering are intended to be used for general corporate purposes. Moreover, BofA may use the proceeds for the repayment of outstanding debt securities. This, in turn, will reduce the company’s debt burden.
BofA’s first-quarter 2011 earnings came in substantially lower than the Zacks Consensus Estimate. Lower top line and higher non-interest expense were primarily responsible for lower-than-expected results. Reduced mortgage banking income and higher litigation expenses were also among the negatives. However, lower credit costs, gains from equity investments, and higher asset management and investment banking fees were among the positives. Even U.S. credit card continued to show improvements. Federal Reserve’s objection to the company’s proposed capital deployment in the second half of 2011 remains a major headwind at this point.
BofA currently retains its Zacks #4 Rank, which translates into a short-term ‘Sell’ rating. Moreover, considering the fundamentals, we are maintaining a long-term “Underperform” recommendation on the stock.
BANK OF AMER CP (BAC): Free Stock Analysis Report
Be the first to comment