The Demand for Green Bonds
52 Pages Posted: 22 Apr 2023
Date Written: April 1, 2023
Drawing on the frameworks of signaling and socially responsible investment (SRI) theoretical lens, we investigate the primary market demands for green bonds (GB). Using unique information on the orderbook size of bonds issued worldwide during 2013-2022, we find that the demand for corporate GB is about 32 to 42% points higher than comparable conventional non-GB issued by similar firms. Further, the demand for debut GB is stronger than seasoned GB offerings and higher for those issued by financial firms compared to non-financial firms. Finally, our results also show that the demand is higher for GB issued by firms with higher environmental commitments and issued in countries with better environmental performance.
Keywords: Green bonds; Investor demand; Orderbook; Primary Market; Signaling Theory; Socially Responsible Investments (SRI); Environmental, Social and Governance (ESG)
JEL Classification: G14, G18, G32, M14, Q56
Suggested Citation: Suggested Citation