Research and publications

Do the Shades of Green Matter? The Pricing and Ownership of “Dark-green” Bonds

This study explores whether the green bonds rated “dark green” by CICERO are priced differently in the market from the light/medium-green ones as well as from the conventional bonds. To measure ...

Author(s) :

Gianfranco Gianfrate, Marco Spinelli

Summary :

This study explores whether the green bonds rated “dark green” by CICERO are priced differently in the market from the light/medium-green ones as well as from the conventional bonds. To measure whether dark-green bonds are priced differently, we match our bonds, rated by CICERO, with comparable bonds that differ as little as possible apart from the green feature. The analysis identified bonds from the same issuer, with the same currency, rating, maturity type, payment rank and coupon type. We find that on average dark-green bonds are not priced differently from otherwise similar non-green bonds. However, we find that the premium for darkgreen bonds increases over time and has been particularly penalised in 2020, possibly because of less investor focus on assets’ environmental footprint during the COVID-19 crisis.

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Type : Academic Publication
Date : 25/02/2021
Editor : Hong Kong Academy of Finance (AoF)