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

By Marisa Wong

Milwaukee, June 30 - Bank of America Corp. plans to price callable capped notes due July 2030 linked to the difference between the 30-year and two-year Constant Maturity Swap rates, according to a term sheet.

The coupon will be 14% for the first year. After that, interest will accrue at four times the spread of the 30-year CMS rate over the two-year CMS rate minus a strike of 25 basis points, up to a maximum rate of 14% 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 July 2011.

The notes will price and settle in July.

Banc of America Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Inc. are the agents. Incapital LLC is the distributor.

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