Bank of America plans 20-year callable capped notes tied to CMS rates

By Susanna Moon

Chicago, Aug. 27 - Bank of America Corp. plans to price callable capped notes due September 2030 based on the difference between the 10-year Constant Maturity Swap rate and two-year CMS rate, according to a 424B2 filing with the Securities and Exchange Commission.

The coupon will be 13% for the first year. After that, the rate will accrue at 4.5 times the spread of the 10-year CMS rate over the two-year CMS rate minus a strike of 12.5 basis points, up to a maximum rate of 13% per year. Interest is payable quarterly and cannot be less than zero.

The payout at maturity will be par.

The notes will be callable at par on any interest payment date beginning September 2011.

The notes (Cusip 06048WDT4) will price and settle in September.

Merrill Lynch, Pierce, Fenner & Smith Inc. is the agent.

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