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Bank of America Sells $2.25 Billion of Debt, Increases Tender

Feb. 2 (Bloomberg) -- Bank of America Corp., the second-biggest U.S. lender by assets, sold $2.25 billion of bonds in its largest offering since July while increasing the amount of debt it’s buying back as part of a tender offer.

The company issued $750 million of 5.7 percent notes due in 2022 in an add-on to a previous sale and $1.5 billion of 5.875 percent, 30-year bonds, according to data compiled by Bloomberg. The 5.7 percent debt pays 3.25 percentage points above similar-maturity Treasuries, and the 30-year debt pays a 2.97 percentage point spread, the data show.

Bank of America, based in Charlotte, North Carolina, marketed the securities after bondholders offered to sell back $3.59 billion of subordinated debt to it as part of a tender offer. The bank, which proposed to buy $1.5 billion of the bonds, raised that amount, it said today in a statement. Yesterday was the early tender deadline, which included a payment of 3 percent of face value. The offer expires Feb. 15.

The bank is reducing more expensive long-term debt as Chief Executive Officer Brian T. Moynihan seeks to cut holdings, expenses and staff while raising capital to meet demands from regulators for a larger cushion against losses. The bonds that the bank is seeking to buy back are denominated in euros, pounds and Canadian and U.S. dollars, with interest rates as high as 8.125 percent.

Bank of America issued $2.5 billion of debt in July, according to data compiled by Bloomberg.

To contact the reporter on this story: Sapna Maheshwari in New York at sapnam@bloomberg.net

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

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