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Green Bonds: the Sovereign Issuers' Perspective

Author

Listed:
  • Raffaele Doronzo

    (Bank of Italy)

  • Vittorio Siracusa

    (Bank of Italy)

  • Stefano Antonelli

    (Bank of Italy)

Abstract

This paper aims at providing an assessment of green bonds from the perspective of sovereign issuers. After a brief depiction of green bonds’ features, we describe the market evolution, present the EU regulatory framework and identify the main benefits and costs for sovereign issuers. We focus on the financial performance of these securities in primary and secondary markets. First, we compare the yields at issuance of sovereign green bonds with non-green bonds of the same issuer with the same maturity. Then we analyse the secondary market performance of green bonds issued by France, Belgium, Ireland and the Netherlands, and we do not find, any remarkable price difference between green and conventional bonds, even after controlling for their different degree of liquidity. Nevertheless, this should not discourage Sovereigns from entering the market since the reason for issuing these securities does not simply hinge upon short-term financial convenience. Green bonds can actually help Sovereigns to mitigate environmental risks and to cope with the intergenerational trade-off in climate-related policies.

Suggested Citation

  • Raffaele Doronzo & Vittorio Siracusa & Stefano Antonelli, 2021. "Green Bonds: the Sovereign Issuers' Perspective," Mercati, infrastrutture, sistemi di pagamento (Markets, Infrastructures, Payment Systems) 3, Bank of Italy, Directorate General for Markets and Payment System.
    • Handle: RePEc:bdi:wpmisp:mip_003_21
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    File URL: https://www.bancaditalia.it/pubblicazioni/mercati-infrastrutture-e-sistemi-di-pagamento/approfondimenti/2021-003/N.3-MISP.pdf
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    References listed on IDEAS

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    Cited by:

    1. Moro, Alessandro & Zaghini, Andrea, 2023. "The green sin: How exchange rate volatility and financial openness affect green premia," CFS Working Paper Series 715, Center for Financial Studies (CFS).
    2. Fauß, Tobias Friedrich, 2022. "Analysis of Green Bonds," Junior Management Science (JUMS), Junior Management Science e. V., vol. 7(3), pages 668-689.
    3. Mariantonietta Intonti & Laura Serlenga & Giovanni Ferri & Matteo De Leonardis, 2022. "The Green Bond Premium: A Comparative Analysis," CERBE Working Papers wpC40, CERBE Center for Relationship Banking and Economics.
    4. Inese Mavlutova & Aivars Spilbergs & Atis Verdenhofs & Jekaterina Kuzmina & Ilja Arefjevs & Andris Natrins, 2023. "The Role of Green Finance in Fostering the Sustainability of the Economy and Renewable Energy Supply: Recent Issues and Challenges," Energies, MDPI, vol. 16(23), pages 1-18, November.
    5. Wu, Jiawen & Li, Jing-Ping & Su, Chi-Wei, 2024. "Can green bond hedges climate policy uncertainty in the United States: New insights from novel time-varying causality and quantile-on-quantile methods?," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 1158-1176.

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    More about this item

    Keywords

    green bonds; public debt; debt management;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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