On Thursday, May 14, the Bank of America Corp. sold a $1 billion corporate bond specifically to help finance part of the health industry amid the coronavirus pandemic. No other major bank has sold a bond to support the health industry during the COVID-19 outbreak yet.
Distribution of Bond Proceeds
The $1 billion proceeds of the bond will go to fund not-for-profit hospitals to treat coronavirus patients, businesses that manufacture PPE, and those that provide diagnostic testing or develop coronavirus vaccines.
Reporting
Bank of America plans to create a website to regularly report how funds have been allocated. These reports will also include case studies, projected outcomes and impact indicators intended to provide an overview of response efforts.
This bond is the first of its kind, but a record $11.9 billion other new bonds with social good in mind have been issued around the world during the first quarter.
Bond Pricing
Bank of America’s COVID-19 bond was priced at a spread of 130 basis points over a risk-free benchmark to yield 1.486%. This was lower than anticipated, which suggests a strong investor demand. According to inside sources, the offering was initially pitched to investors at a spread of 145 basis points over Treasurys.
