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How Sovereign Sustainable Bond Issuance Shakes Up the Corporate Sustainable Bond Market?: Evidence From Asian Markets

Author

Listed:
  • Seiwan Kim
  • Resi Ong Olivares
  • Donghyun Park
  • Shu (Grace) Tian
  • Sunjoo Yang

Abstract

This study examines how sovereign sustainable bond issuance affects the yields and liquidity of corporate sustainable bonds in eight Asian markets. Using panel vector autoregression (VAR) and daily data from 2018 to 2024, we find that initial sovereign sustainable bond issuance improves corporate sustainable bond liquidity and reduces yield spreads in the medium term. We further find that this reduction is primarily driven by a persistent decline in greenium rather than a lower risk premium. Corporate sustainable bond issuance rises post‐sovereign issuance, with more diverse issuers entering the market. Additionally, fund flows into ESG mutual funds increase, reflecting stronger demand for sustainable assets. Our findings highlight the positive role of sovereign issuance in scaling up private sustainable finance. JEL Classification: G12, C33, E43, Q54.

Suggested Citation

  • Seiwan Kim & Resi Ong Olivares & Donghyun Park & Shu (Grace) Tian & Sunjoo Yang, 2026. "How Sovereign Sustainable Bond Issuance Shakes Up the Corporate Sustainable Bond Market?: Evidence From Asian Markets," Asian Economic Policy Review, Japan Center for Economic Research, vol. 21(1), pages 57-67, January.
    • Handle: RePEc:bla:asiapr:v:21:y:2026:i:1:p:57-67
    DOI: 10.1111/aepr.70008
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    References listed on IDEAS

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    Cited by:

    1. Haruyoshi Ito, 2026. "Comment on “How Sovereign Sustainable Bond Issuance Shakes up the Corporate Sustainable Bond Market?: Evidence From Asian Markets”," Asian Economic Policy Review, Japan Center for Economic Research, vol. 21(1), pages 68-69, January.
    2. Irene Monasterolo, 2026. "Comment on “How Sovereign Sustainable Bond Issuance Shakes Up the Corporate Sustainable Bond Market?: Evidence From Asian Markets”," Asian Economic Policy Review, Japan Center for Economic Research, vol. 21(1), pages 70-71, January.
    3. Caroline Flammer & Takatoshi Ito & Kazumasa Iwata & Colin McKenzie & Shujiro Urata, 2026. "Sustainable Finance in Asia: Editors' Overview," Asian Economic Policy Review, Japan Center for Economic Research, vol. 21(1), pages 5-13, January.
    4. Caroline Flammer, 2026. "Sustainable Finance: Tools, Effectiveness, and Challenges," Asian Economic Policy Review, Japan Center for Economic Research, vol. 21(1), pages 14-19, January.

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    More about this item

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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