Survey of Green Bond Pricing and Investment Performance

Abstract

Green bonds are similar to conventional bonds but are specifically earmarked to raise money to finance climate or environmental projects. There have been anecdotes of green bonds being priced tighter than similar conventional bonds by the same issuers. Our survey of academic literature indicates that most papers show the yield of a green bond is lower than that of the equivalent conventional bond at issuance (also known as green premium or greenium). However, green bond pricing studies by Climate Bonds Initiative produce mixed results. The conflicting results are likely explained by differences in sample selections, time periods, methodologies, and the properties of the respective issuing entity and the bond. In addition, we examine investment returns from select green bond funds and green bond indexes. The assets under management of those funds are still small and they underperform their benchmark indexes.

A Cognizance of Green Bond Features Preferential to Renewable Energy Project Financing in Ghana

“…Fixed-rate of return on investment Ng and Tao (2016), Talal et al, (2016), Chugan et al (2017), Liaw (2020), and Roboredo (2020). 9…”

The Global Green Bond Market in the Face of the COVID-19 Pandemic

“…However, it is important to mention that although the significant development of the green bond markets is observed in advanced economies, the green bond market in lower and middle-income countries is still in the embryonic state (Otec Ntsama et al, 2021). Moreover, despite the demonstrated tremendous growth, the green bond market still remains small in comparison with the fixedincome market (Liaw, 2020).…”

Green Bond: A Systematic Literature Review for Future Research Agendas

“…The expected main outputs are the identification of more significant research trends, their classification into macro-areas, the picture of any research gap in this novel field of study, and the visualization of future research directions. To the best of our knowledge, only Liaw (2020) andMacAskill et al (2021) analyzed the academic literature on green bonds. In contrast with our paper, both of the previous literature reviews have focused only on the so-called "Greenium" or "green bond premium", as highlighted in Table 3.…”

“…As shown in the following section, despite the fact that Greenium is one of the most exciting and controversial phenomena studied by academics, different profiles on green bonds have been explored in the last years. Additionally, in contrast with Liaw (2020), this paper performs a systematic literature review, using a standardized literature selection model. Moreover, in contrast with MacAskill et al (2021), our paper focuses on any aspects of green bond that are deepened by empirical economic literature and not exclusively on the topic of Greenium.…”

“…Moreover, in contrast with MacAskill et al (2021), our paper focuses on any aspects of green bond that are deepened by empirical economic literature and not exclusively on the topic of Greenium. Liaw (2020) and MacAskill et al (2021), through the analysis of the state-of-art of Greenium literature, aimed to detect whether there was academic consensus on that phenomenon. This paper, instead, focuses on the broad systematic literature analysis with the objective of giving scholars a clear view of all the significant research trends in the green bond empirical literature and providing some suggestions for future works.…”