{"data":{"id":"sw_0f7af0ac2f569fa85625","slug":"bank-of-america-s-oldest-preferred-series-trades-35-7-below-par-despite-being-fr","title":"Bank of America's Oldest Preferred Series Trades 35.7% Below Par Despite Being Freely Callable","subheadline":"BAC'P and the rest of Bank of America's legacy preferred stack sit at steep discounts to liquidation value even as the bank's common stock trades near 52-week highs.","summary":"Bank of America's 4.125% Series PP preferred (BAC'P) trades at $16.07, a 35.7% discount to its $25 par value, despite being callable since February 2026. Its legacy preferred stack shows similar discounts while BAC common nears 52-week highs.","body":"Bank of America Corporation's oldest outstanding fixed-rate preferred issue, the 4.125% Series PP depositary shares known by the ticker BAC'P, closed recently at $16.07, a 35.7% discount to its $25 liquidation preference. The gap stands out because the security has been freely callable by the bank since February 2, 2026, meaning Bank of America could redeem the shares at full par value at any time but has so far chosen not to.\n\nThe discount translates into a current yield of 6.42% on the $1.0312 annual dividend, well above the coupon rate stamped on the security when it priced in January 2021. That yield premium is the market's way of compensating buyers for two intertwined risks: the possibility that Bank of America never calls the shares, leaving holders locked into a below-market coupon indefinitely, and the reality that even if it does call them, investors who bought below par today would still book a gain versus their purchase price rather than a loss. The pattern is not unique to this single series: a move that first stood out in data tracked on Preferred Stock AI, a Madison Labs research site, which tracks pricing across Bank of America's full stack of legacy preferred issues, from Series E's 4.00% coupon through more recent series carrying coupons above 5%.\n\nWithin the broader category of 76 comparable bank preferred issues, the average discount to par runs around -14.8%, according to the tracked data, meaning BAC'P's -35.7% discount is more than double the peer average, while its 6.42% current yield also sits above the category's average yield. The gap suggests, on one reading of the pricing data, that BAC'P and several of its sibling series carry a coupon low enough, relative to today's market rates, that investors have priced in a long window before any redemption, if one comes at all.\n\nWhy this matters to preferred stock investors centers on the mechanics of perpetual, non-cumulative preferred equity. Unlike bonds, these instruments have no maturity date; once a call date passes, the issuer holds full discretion over whether to redeem. Bank of America's own prospectus for the Series PP offering stated that proceeds could be used \"for general corporate purposes, including, but not limited to, the repurchase or redemption of outstanding preferred securities\": language common to bank preferred issuance that leaves redemption timing entirely at the issuer's discretion rather than on any fixed schedule investors can count on.\n\nThe broader context is a preferred stock stack built in a very different rate environment. Series PP priced in January 2021, near the depths of pandemic-era near-zero rates, when a 4.125% coupon was considered attractive; Series E, at 4.00%, is older still. With benchmark rates having moved sharply higher since then, coupons struck five years ago now look comparatively unattractive next to freshly issued bank preferred paper carrying coupons above 5% or even above 7%, which trades closer to par. That dynamic is a familiar feature of fixed-rate perpetual preferred markets broadly, not something specific to Bank of America.\n\nThe discount in BAC'P and its legacy peers also stands in visible contrast to Bank of America's common stock, which recently traded at $56.02, up 1.56% on the day and sitting near its 52-week high of $57.55, according to trading data cited alongside the preferred issue. The divergence, common equity near highs while legacy preferred trades deep below liquidation value, reflects, in one interpretation of the figures, that equity investors are pricing in the bank's earnings and growth outlook while fixed-income-style preferred holders are pricing primarily off the interest-rate backdrop and call optionality embedded in each series.\n\nThat rate backdrop remains a live topic for markets generally. BofA's own chief investment strategist, Michael Hartnett, has been quoted discussing Federal Reserve dynamics and the path of yields around recent Jackson Hole commentary, underscoring that interest-rate expectations continue to be closely watched by market participants tracking fixed-income-adjacent instruments such as preferred stock.\n\nGoing forward, market participants tracking Bank of America's preferred stack are likely to watch whether the bank moves to redeem any of its now-callable legacy series, including BAC'P, Series E, or others trading at comparable discounts, as well as how new preferred issuance from Bank of America and peer banks is priced relative to prevailing rates. Any redemption decision, dividend declaration, or shift in benchmark yields could alter the discount-to-par calculus for these securities, though no timeline for such actions has been indicated by the company.","source":{"name":"Preferred Stock AI","slug":"preferredstock-ai"},"category":"Preferred Stocks","article_type":"Data Story","license":"Free to republish, in full or in part, with attribution to SourceWire and a link to the original article. No fees, registration, or permission required.","quality_score":86,"human_reviewed":false,"original_url":"https://preferredstock.ai/symbol/BAC-P-P","featured_image":null,"published_at":"2026-08-29T11:23:43.521229+00:00","updated_at":"2026-08-29T11:23:43.521229+00:00","is_demo":false,"attribution":"Via SourceWire. Discovered via Preferred Stock AI.","attribution_html":"Via SourceWire. Discovered via Preferred Stock AI."},"meta":{"demo_data":false}}