Bank of America plans market participation CDs linked to CMS rates

By Susanna Moon

Chicago, Aug. 2 - Bank of America, NA plans to price 0% market participation certificates of deposit due Aug. 26, 2030 based on the 30-year Constant Maturity Swap rate and the two-year CMS rate, according to a term sheet.

The coupon will be 9% for the first year. After that, the rate will accrue at four times the spread of the 30-year CMS rate over the two-year CMS rate minus a strike of 87.5 basis points, up to a maximum rate of 9% 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 Aug. 26, 2011.

The CDs will settle on Aug. 26.

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

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