After agreeing to pay penalties worth $16.7 billion for faulty mortgage practices, Bank of America Corp (NYSE:BAC) has started its efforts to put up the money with $3 billion worth of preferred offerings to the investors.
Bank of America Corp (NYSE:BAC) offered perpetual shares worth $2 billion with a minimum repurchase period limit of 10 years, The bank offered securities with a face value of $1,000 each and an interest of 6.25% for the next 10 years. Interest rate is fixed until 2024 and floating after that. Sale of perpetual preferred stock amounted for $1 billion with a coupon interest of 6.625% and $25 face value. The minimum repurchase period for these stocks is 5 years.
In addition to its preferred offerings, Bank of America Corp (NYSE:BAC) issued notes worth $4.5 billion in three different parts throughout the last month. The first two-part sale yielded 4.06% profits with 101.6 cents return against every dollar, as per the Financial Industry Regulatory Authority’s reporting system, Trace.
Earlier, Bank of America Corp (NYSE:BAC) agreed to pay $16.7 billion in penalty for offering bad mortgages to the investors and added to the financial crisis in 2008. It was one of the biggest penalties imposed on any financial institution by the government regulatory authorities, the U.S. Department of Justice. The bank will pay $9.65 billion in cash followed by consumer relief services worth $7 billion. The consumer relief program would include loan modifications, affordable rental housing program, community reinvestments, and even principal forgiveness. Despite of an extremely huge amount, the settlement has relieved Bank of America Corp (NYSE:BAC) from legal issues and it can look forward to a better performance.
This article has been written by Prakash Pandey.