How Large is the Sovereign Greenium?

By Sakai Ando, Chenxu Fu, Francisco Roch, Ursula Wiriadinata

April 7, 2023

Preview Citation

Format: Chicago

Sakai Ando, Chenxu Fu, Francisco Roch, and Ursula Wiriadinata. How Large is the Sovereign Greenium?, (USA: International Monetary Fund, 2023) accessed November 19, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

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 points on 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.

Subject: Bonds, Climate finance, Environment, Financial institutions, Sovereign bonds

Keywords: Bond database, Bonds, Climate Change., Climate finance, Financial Innovation, Green bond, Green bond data, Green Bonds, Green premium, Greenium, Sovereign bonds, Sovereign Debt, Sustainable Finance

Publication Details

Pages:

15
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2023/080
Stock No:

WPIEA2023080
ISBN:

9798400235160
ISSN:

1018-5941

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