The Dynamics of Greenium in Italian Sovereign Green Bonds: Evidence from the Secondary Market

Abstract

Italy, constrained by high public debt, faces challenges financing the green transition. Green bonds offer a potential advantage if they carry a yield premium (“greenium”). We examine whether Italian sovereign green bonds capture this benefit. While no significant greenium is observed at issuance, we find that it grows by ap- proximately 0.91 basis points per day in secondary markets. This suggests persistent investor demand for green-labelled debt and implies that the Italian Treasury may be underpricing its green bonds. Refining the issuance strategy could help internalise the greenium, lower borrowing costs, and improve the fiscal case for sustainable investment.

Keywords: public finance, Public Debt Management, Climate change, Green Bonds, Greenium, Italy