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How Large is the Sovereign Greenium?

Author

Listed:
  • Sakai Ando

    (IMF)

  • Chenxu Fu

    (University of Tokyo)

  • Francisco Roch

    (IMF/UTDT)

  • Ursula Wiriadinata

    (IMF)

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 pointson 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.

Suggested Citation

  • Sakai Ando & Chenxu Fu & Francisco Roch & Ursula Wiriadinata, 2023. "How Large is the Sovereign Greenium?," Working Papers 253, Red Nacional de Investigadores en Economía (RedNIE).
    • Handle: RePEc:aoz:wpaper:253
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    File URL: https://rednie.eco.unc.edu.ar/files/DT/253.pdf
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    References listed on IDEAS

    as
    1. Giuseppe Cortellini & Ida Claudia Panetta, 2021. "Green Bond: A Systematic Literature Review for Future Research Agendas," JRFM, MDPI, vol. 14(12), pages 1-29, December.
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    More about this item

    Keywords

    Green bonds; Sustainable finance; Financial innovation; Sovereign debt; Greenium; Climate change.;
    All these keywords.

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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