Bank of America Sells First Structured Note Tied to Metals Index

Bank of America Corp. sold $24.1 million of 14-month notes tied to precious metals, the first offering linked to its proprietary index that tracks gold, platinum, palladium and silver.

The securities, issued Jan. 30, yield three times the gains of the Merrill Lynch Commodity Index Extra Precious Metals Plus - Excess Return up to 13.05 percent with no protection against losses and all capital at risk, according to a prospectus filed with the U.S. Securities and Exchange Commission. The bank distributed the notes for a 2 percent fee and charges a 0.75 percent hedging fee.

The index was created in 2008 and tracks a weighted basket of futures on the four metals, according to the prospectus. The weighting of the assets changes and is determined by the bank. It is a modified version of the Merrill Lynch Commodity Index Extra, which tracks commodity segments.

Matt Card, a spokesman for the bank, declined to comment on the note.

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.

To contact the reporter on this story: Kevin Dugan in New York at kdugan4@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

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