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BofA Sells Biggest Structured Note Tied to Nikkei in Three Years

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Jan. 31 (Bloomberg) -- Bank of America Corp. sold $9.3 million of two-year notes tied to the Nikkei 225 Stock Average, the biggest offering linked to the Japanese index in at least three years.

The securities, issued Jan. 24, yield twice the gains of the index up to 19.62 percent with protection against five percent of losses and 95 percent of 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.

Banks have sold $27.6 million of notes linked to the benchmark in six offerings since January 2010, when Bloomberg began collective comprehensive data on U.S. structured notes. The index closed at 11,138.66 today, a 7.2 percent rise since the beginning of the year.

Matt Card, a spokesman for Bank of America, declined to comment on the offering.

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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