Bank of America (NYSE:BAC) Attracting Buyers to Toxic Bonds

Approximately $1 billion in toxic bonds are being offered for sale by Bank of America (NYSE:BAC), which has already written them off, said a report in the New York Post.

In anticipation of this, bond buyers like Pimco's Total Return Fund (PTTRX), managed by the legendary Bill Gross, and the DoubleLine Total Return Bond Fund (DBLTX), managed by Jeffrey Gundlach have been raising capital in order to take advantage of Bank of America and others ready to offload the mortgage bonds.

"The sale is very small relative to the overall size - but it is probably the troubled stuff that is the most expensive to service and this is what the hedge fund guys would want to buy," said Paul Miller, bank analyst at FBR Capital Markets, cited by the Post.

They added, “Buyers for the loans, which BofA has already written off, are circling. Bids are due by the end of December."

It should be a win/win, as the more risky bonds are more expensive to service, but also more desirable to investors.

Having already been written off, it shouldn't drive the share price of Bank of America down.

BofA was trading at $12.75, down $0.05, or 0.39 percent, as of 12:29 PM EST.