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Greenium in the Chinese corporate bond market

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  • Hu, Xiaolu
  • Zhong, Angel
  • Cao, Youdan

Abstract

This paper explores the pricing implications of green bonds in the Chinese corporate bond market. We document a large greenium in the Chinese green bond market, whereby green bonds are issued at lower offering yield spreads in the primary market and traded at lower yields in the secondary market. The magnitude of the Chinese greenium is substantially greater than other international green bond markets. Exploring the underlying mechanisms, we document convincing evidence that mitigation of information asymmetry and exposure to salient environmental stimuli such as air pollution are plausible explanations of the greenium.

Suggested Citation

  • Hu, Xiaolu & Zhong, Angel & Cao, Youdan, 2022. "Greenium in the Chinese corporate bond market," Emerging Markets Review, Elsevier, vol. 53(C).
    • Handle: RePEc:eee:ememar:v:53:y:2022:i:c:s1566014122000632
    DOI: 10.1016/j.ememar.2022.100946
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    More about this item

    Keywords

    Climate finance; green bonds; Corporate bond market; Chinese economy;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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