By Laura Mandaro

SAN FRANCISCO (Dow Jones) -- Pfizer, Inc. on Monday gave taxpayers a glimpse into how banks are using some of the Treasury Department's $200 billion in bank aid, saying it had lined up $22.5 billion in what would be the largest high-quality bank deal since March.

The world's top drugmaker (PFE) said it was financing one-third of its $68 billion takeover of rival Wyeth (WYE) with debt and had received a commitment from a syndicate of five banks - J.P. Morgan Chase (JPM), Bank of America Merrill Lynch (BAC), Barclays, Citigroup (C) and Goldman Sachs (GS) -- for the financing.

If Pfizer uses bank loans for the entire $22.5 billion in debt built into the deal, as it's expected to do, the financing would represent the largest bank-loan syndication since government-sponsored enterprise Sallie Mae (SLM) raised $31 billion in March, according to Dealogic.

Analysts say the deal shows that where incentives like lucrative underwriting are on offer, banks are ready to open up their purses.

"The money is there," said Ken Jaques, senior analyst at Informa. The banks "are just picking and choosing."

The five banks syndicating the bank debt also advised Pfizer on the takeover, a typical arrangement in big mergers.

And the deal shows where some of the capital injected into the banks under the Troubled Asset Relief Program is headed. Some Congressional lawmakers and President Barack Obama have criticized the banking industry for not using this capital to increase loans to consumers and businesses.

"It's good to see that banks are doing what banks are supposed to be doing," said Pfizer CEO Jeff Kindler on a conference call with reporters Monday. J.P. Morgan Chase, Bank of America, Citigroup and Goldman Sachs have all received government aid under last fall's TARP program.

"Banks are under a lot of pressure to lend," said Leslie Barbi, head of fixed income at RS Investments, a unit of Guardian Life Insurance Co. that manages $19 billion in fixed income assets.

Bank lending has been stymied, she says, by banks' constraints to keep their capital levels high as they write down huge chunks of bad loans and securities. Plus many would-be borrowers look too risky as the economy sours.

"I bet they're jumping up and down and clapping hands to lend to this kind of borrower," said Barbi of the banks in the Pfizer syndicate. "It's a boon to them."

The bank financing also reflects a revival in high-quality corporations' ability to access lending markets, which had nearly shuttered late last year as investors flocked to safe-haven Treasury debt and cash.

So far this month, companies with investment-grade ratings have raised $2.3 billion in bank loans - or about 6% of the capital raised in January of last year, Dealogic says.

Analysts anticipate Pfizer will ultimately issue public bonds to pay down some of the bank loans. They could be in the $5 billion to $7 billion range, said Jaques of Informa.

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