(In)-Credibly Green: Which Bonds Trade at a Green Bond Premium?

24 Pages Posted: 28 Mar 2019

See all articles by Julia Kapraun

Julia Kapraun

Goethe University Frankfurt - House of Finance

Christopher Scheins

Goethe University Frankfurt

Date Written: March 5, 2019


This paper provides an in-depth analysis of the green bond premium, so-called Greenium, using both, primary and secondary market data. We consider a large sample of over 2,000 green bonds issued worldwide and estimate the differences in yields of green and comparable conventional bonds. Our primary market results reveal a significantly negative premium of 20--30 bps for green bonds, implying that at issuance, green bonds are trading at higher prices than their conventional counterparts. This premium, however, varies across currencies and issuer types. In particular, credibility plays an important role as bonds backed by a collateral or issued by more credible entities are issued at lower yields. Using secondary markets data we find higher differences in yields for bonds with shorter time to maturity and larger issue sizes. Remarkably, bonds listed on exchanges with a dedicated green bond segment are traded at 20 bps lower yields, on average, pointing out the importance of transparency and clear standards for the growth of the green bonds market.

Keywords: Green Bonds, Sustainable Investing, Green Premium, Green Exchanges

JEL Classification: C33, G12, G14, G20, Q56

Suggested Citation

Kapraun, Julia and Scheins, Christopher, (In)-Credibly Green: Which Bonds Trade at a Green Bond Premium? (March 5, 2019). Available at SSRN: https://ssrn.com/abstract=3347337 or http://dx.doi.org/10.2139/ssrn.3347337

Julia Kapraun (Contact Author)

Goethe University Frankfurt - House of Finance ( email )

Theodor-W.-Adorno Platz 3
Frankfurt am Main, 60323

Christopher Scheins

Goethe University Frankfurt ( email )

Grüneburgplatz 1

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