Bank of America Corporation announced that it will redeem all $3 billion of its 5.080% Fixed/Floating‑Rate Senior Notes due January 2027 (CUSIP 06051GLE7). The redemption will be executed on January 20, 2026 at a price equal to 100 % of the principal amount plus accrued and unpaid interest, with interest ceasing to accrue on the redemption date.
The decision to retire the notes comes as the bank’s cost of capital has fallen since the notes were issued. By paying the full principal and accrued interest, Bank of America will reduce its interest expense by roughly $120 million annually, improving its leverage profile and freeing capital for future growth initiatives such as AI and technology investments. The move is part of a broader debt‑management strategy that has already seen the bank redeem $3 billion of senior notes due June 2026 earlier in 2025.
The redemption will lower the bank’s total debt by $3 billion, which translates into a modest lift in its Common Equity Tier 1 (CET1) ratio and a slight improvement in its leverage ratio. While the impact on quarterly cash flow is expected to be modest, the action signals to investors that the bank is actively optimizing its capital structure and maintaining a strong buffer above regulatory minimums.
In the context of its recent debt‑management activity, this redemption follows a similar $3 billion redemption of notes due June 2026 announced in June 2025. The pattern demonstrates a deliberate effort to retire higher‑cost debt as market conditions become favorable, thereby reducing long‑term interest obligations and supporting the bank’s strategic priorities.
Bank of America’s chief financial officer, Brian Moynihan, said the redemption “strengthens our balance sheet and provides additional flexibility to invest in high‑return opportunities, including our AI initiatives.” The CFO emphasized that the bank’s capital position remains robust, with a CET1 ratio well above the regulatory minimum, and that the freed capital will be deployed in a disciplined manner to support shareholder value and future growth.
The redemption is viewed as a routine, yet strategically important, balance‑sheet action. No significant market reaction has been reported, indicating that investors see the move as part of the bank’s ongoing capital‑optimization program rather than a headline‑making event. The action reinforces Bank of America's commitment to prudent financial stewardship while positioning it for continued investment in technology and growth initiatives.
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