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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.
    2. Jochen M. Schmittmann & Yun Gao, 2022. "Green Bond Pricing and Greenwashing under Asymmetric Information," IMF Working Papers 2022/246, International Monetary Fund.
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    Cited by:

    1. Mahdi Sojoudi & Carole Bernard & Philippe Dupuy & Gareth W. Peters, 2026. "Green spread of US municipal bonds," Annals of Operations Research, Springer, vol. 357(1), pages 679-705, February.
    2. Giusy Chesini, 2024. "Can Sovereign Green Bonds Accelerate the Transition to Net-Zero Greenhouse Gas Emissions?," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 30(2), pages 177-197, May.
    3. Di Tommaso, Caterina & Perdichizzi, Salvatore & Vigne, Samuel & Zaghini, Andrea, 2025. "Is the Government always greener?," Energy Economics, Elsevier, vol. 152(C).
    4. Chang, Kaiwen & Luo, Dan & Xing, Kai & Mi, Biao, 2025. "The effectiveness of the green bond instrument on stimulating firms' green innovation performance: A comparative study based on Chinese market," Pacific-Basin Finance Journal, Elsevier, vol. 91(C).
    5. Panizza, Ugo & Shi, Shuyang & Weder di Mauro, Beatrice & Gulati, Mitu, 2025. "The Sovereign Greenium: Big Promise but Small Price Effect," CEPR Discussion Papers 20817, Centre for Economic Policy Research.
    6. De Vincentiis, Paola & Abis, Danilo, 2025. "Non-identical twins: Evidence on greenium in the German treasury bond market," Research in International Business and Finance, Elsevier, vol. 79(C).
    7. Gong Cheng & Torsten Ehlers & Frank Packer & Yanzhe Xiao, 2024. "Sovereign Green Bonds: A Catalyst for Sustainable Debt Market Development?," IMF Working Papers 2024/120, International Monetary Fund.
    8. Siddique, Md. Abubakar & Nobanee, Haitham & Hasan, Md. Bokhtiar & Uddin, Gazi Salah & Nahiduzzaman, Md., 2024. "Is investing in green assets costlier? Green vs. non-green financial assets," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 1460-1481.
    9. Di Tommaso, Caterina & Foglia, Matteo & Pacelli, Vincenzo, 2026. "The contagion effect of natural disasters in the Sovereign CDS market: Which causes?," International Review of Financial Analysis, Elsevier, vol. 111(C).
    10. 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.

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    Keywords

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    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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