The issuance spread of China's low-carbon transition bonds

Low-carbon transition bonds, as a particular type of sustainable financial instrument, raise funds specifically for the low-carbon transition sector, filling the gap in green finance's support for high-carbon industries. This paper takes low-carbon transition bonds as the research object, studies the current development status of low-carbon transition bonds, and uses the ordinary least squares method to analyze the impact of the transition attribute of these bonds on issuance spreads, showing that they can reduce corporate financing costs. The findings reveal that: (1) There is a significant negative correlation between transition attribute and issuance spreads, and this result holds true after a series of robustness checks. Moreover, the characteristics of the bond itself influence its pricing. (2) Heterogeneity analysis indicates that low-carbon transition bonds can better help non-listed companies and economically underdeveloped regions to finance at lower costs. Finally, this paper provides policy recommendations for the future development and improvement of low-carbon transition bonds.