How Large is the Sovereign Greenium?

IMF Working Papers, April 7, 2023

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How Large is the Sovereign Greenium?

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Bibliographic details

• Authors: Sakai Ando, Chenxu Fu, Francisco Roch, Ursula Wiriadinata
• Published: April 7, 2023
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9798400235160.001

Overview

• This paper assembles a comprehensive sovereign green bond database and estimates the sovereign greenium.
• The development of green bond markets has been one of the most important financial breakthroughs in the domain of sustainable finance during the last 15 years.
• A central benefit associated with green bonds is that they exhibit a positive green premium (greenium), i.e., a lower yield relative to a similar conventional bond.
• Sovereign green bond issuances have been relatively recent and not well documented in the literature.

Key findings

• Green bonds are issued at a relatively small premium of 4 basis points on average in Advanced Economies.
• The greenium is growing over time.
• The greenium is considerably larger for Emerging Market Economies: 11 basis points on average.

Subjects and keywords

• Subjects: Bonds, Climate finance, Environment, Financial institutions, Sovereign bonds
• Keywords: bond database, Bonds, Climate Change., Climate finance, Financial Innovation, green bond, Green bond data, Green Bonds, green premium, Greenium, Sovereign bonds, Sovereign Debt, Sustainable Finance

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