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

41 Pages Posted: 28 Mar 2019 Last revised: 9 Dec 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


The most important determinant for the existence of a Green premium is the perceived ``Green--credibility'' of the corresponding bond and its issuer. We analyze a large sample of more than 1,500 Green bonds with respect to their pricing on the primary and secondary market. On both markets, only certain types of Green bonds trade at a Green premium (i.e., exhibit lower yields) relative to their conventional counterparts, namely those, which are issued by governments or supranational entities, denominated in EUR or USD, or corporate bonds with very large issue sizes. These bonds and their issuers might be viewed as more credible in terms of a better implementation or a greater impact of the financed Green project. For corporate issues, credibility of the Green label reveals to be of particular importance. Investors are more likely to consider a corporate bond as Green, i.e., be willing to pay a premium for it, when the bond is certified as such by a third party, or when the bond is listed on an exchange with a dedicated Green bond segment and tight listing requirements.

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). Proceedings of Paris December 2019 Finance Meeting EUROFIDAI - ESSEC, 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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