How Large is the Sovereign Greenium?

15 Pages Posted: 19 Apr 2023

See all articles by Sakai Ando

Sakai Ando

International Monetary Fund (IMF)

Chenxu Fu

Independent

Francisco Roch

International Monetary Fund (IMF)

Ursula Wiriadinata

International Monetary Fund (IMF)

Multiple version iconThere are 2 versions of this paper

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 benefit associated with green bonds has been that they exhibit a positive green premium (greenium), i.e., 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.

Keywords: Green Bonds, Sustainable Finance, Financial Innovation, Sovereign Debt, Greenium, Climate Change., bond database, green bond, Green bond data, green premium, Climate finance, Bonds, Sovereign bonds

JEL Classification: F34, G15, H63, Q01, Q58, Q50, G10

Suggested Citation

Ando, Sakai and Fu, Chenxu and Roch, Francisco and Wiriadinata, Ursula, How Large is the Sovereign Greenium?. IMF Working Paper No. 2023/080, Available at SSRN: https://ssrn.com/abstract=4423375 or http://dx.doi.org/10.5089/9798400237812.001

Sakai Ando (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Chenxu Fu

Independent ( email )

United States

Francisco Roch

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Ursula Wiriadinata

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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