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How Large is the Sovereign Greenium?

Author

Listed:
  • Sakai Ando
  • Chenxu Fu
  • Francisco Roch
  • Ursula Wiriadinata

Abstract

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 pecuniary benefit for green bond issuers has been that these bonds exhibit a positive green premium (greenium), that is, a lower yield relative to a similar conventional bond. Yet, issuances at the sovereign level have been relatively recent and not well documented in the literature. We find that green bonds are issued at a relatively small premium (4 basis points on average) in Advanced Economies. Yet, importantly, the greenium is growing over time and is considerably larger (11 basis points on average) for Emerging Market Economies.

Suggested Citation

  • Sakai Ando & Chenxu Fu & Francisco Roch & Ursula Wiriadinata, 2024. "How Large is the Sovereign Greenium?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 86(6), pages 1472-1483, December.
    • Handle: RePEc:bla:obuest:v:86:y:2024:i:6:p:1472-1483
    DOI: 10.1111/obes.12619
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