Bank of America plans to price one-year Stars linked to fund basket

By E. Janene Geiss

Philadelphia, Aug. 27 - Bank of America Corp. plans to price one-year 0% Strategic Accelerated Redemption Securities linked to a basket of two exchange-traded funds, according to an FWP filing with the Securities and Exchange Commission.

The equally weighted basket consists of the iShares MSCI EAFE index fund and the iShares MSCI Emerging Markets index fund.

If the basket closes at or above its initial level on any of three observation dates, the notes will be called at par of $10 plus a call premium.

If the notes are called in March 2011, the payout will be par plus $0.45 to $0.65. If the notes are called in June 2011, the payout will be par plus $0.675 to $0.975, and if the notes are called in September 2011, the payout will be par plus $0.90 to $1.30. The exact premiums will be set at pricing.

If the notes are not called, the payout at maturity will be par if the final basket level is greater than or equal to the threshold level, 90% of the initial level. Investors will be exposed to any decline below the threshold level.

The notes will price in September and settle in October.

Merrill Lynch, Pierce and Fenner & Smith Inc. is the underwriter.

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