Research in Progress

Sustainable Finance

(In)-Credibly Green: Which Bonds Trade at a Green Bond Premium?, with Christopher Scheins

This paper provides an in-depth analysis of the pricing of Green bonds, using both, primary and secondary market data. We consider a large global sample of Green bonds and estimate the differences in yields of Green and comparable conventional bonds. At issuance, we find significantly lower yields of 24 bps for Green bonds, implying that Green bonds start trading at a premium compared to their conventional counterparts. This premium, however, varies across currencies and issuer types. Further, on the secondary markets, only bonds issued by governments and supranationals trade at a small premium indicating the importance of credibility, transparency and clear standards for the growth of the Green bonds market. Finally, we reveal the relevance of the listing of the bond on Green exchanges and the overall sustainability reputation of the issuer for the acceptance of Green bonds by investors.