(Bloomberg) — Bank of America Corp. was the primary on Wall Avenue to concern a pandemic bond. It hopes to set a pattern.The bank priced a $1 billion bond providing Could 14 to fund initiatives addressing social points associated to Covid-19, the primary sale from a U.S. monetary establishment that explicitly hyperlinks all proceeds to tackling the virus. Response from buyers has been enthusiastic, mentioned Karen Fang, the bank’s world head of sustainable finance.“ESG is not just a bull market luxury,” Fang mentioned in an interview, citing the bank’s personal analysis. “ESG is a bear market necessity.”Companies, governments, multilateral organizations and growth banks have raised a document $108.four billion of debt this 12 months to alleviate the impacts of the lethal virus, in accordance with knowledge compiled by Bloomberg. Chinese language corporations have bought a lot of the so-called pandemic bonds, elevating about $48.three billion.Bank of America’s bond happened in March because the virus unfold by way of the U.S. and far of the nation started to close down. Senior executives, together with Vice Chairman Anne Finucane and Chief Working Officer Tom Montag, have been concerned in inner discussions on the bond, which took weeks to assemble.The pricing for the fixed-to-floating fee notes earmarked for lending to the well being care trade was aggressive. The deal priced tighter than the lender’s common benchmarks, Fang mentioned, and the bonds will yield 1.30 share factors above Treasuries.Sturdy PipelineBank of America has raised greater than $eight billion by way of environmentally and socially themed bonds and has a “very strong” pipeline, Fang mentioned. Different virus-related debt contains Pfizer Inc.’s $1.25 billion sustainability bond and USAA Capital Corp.’s $800 million providing to fund initiatives that may embody Covid-19 aid.Whereas the deal is smart for a lender like Bank of America with a big presence in inexperienced and social bond markets, it may not open the floodgates for related transactions, in accordance with CreditSights analysts.“We’re a little doubtful we’re going to see an imminent increase in ESG-type offerings from the banks,” CreditSights’ chief of ESG and sustainability Josh Olazabal and the top of U.S. financials Jesse Rosenthal, wrote in an e mail. “It will really come down to the issuer’s internal goals around ESG products and investors.”Nonetheless, ESG-focused buyers like Nuveen and Eaton Vance Administration anticipate that extra business banks will observe go well with. Different lenders which have “the focus and expertise” to originate such loans will search to copy Bank of America’s deal, in accordance with Vishal Khanduja, head of investment-grade portfolio administration at Eaton Vance.“We expect other sponsors to continue to innovate the structure and provide investable impact opportunities at scale,” Khanduja mentioned Tuesday in an interview.Nuveen, which oversees about $1 trillion in property, has already had discussions with underwriters from two banks as a result of there may be curiosity in related offers, in accordance with Stephen Liberatore, head of the accountable fixed-income technique group.“This was the leader,” Liberatore mentioned of Bank of America’s bond. “Now that others are seeing what’s expected and how it can be done, there’s a template for other banks.”©2020 Bloomberg L.P.