▶ Find Olivier David Zerbib’s working paper :
The article examines the yield (or the cost of financing, seen from the perspective of the issuer) of the green bonds. We use a matching method, followed by a two-step regression, to estimate the yield differential between a green bond and a synthetic bond in exactly the same way, between July 2013 and December 2017.
The yield on green bonds is on average 2 basis points lower than that of a conventional secondary market bond for the total sample, as well as for bonds issued in Euro and US Dollars.
We show that the main determinants of this premium are the credit rating of the issuer and the type of issuer: the negative premium is even more pronounced for bonds issued by financial institutions and for bonds with a low rating. . The results thus suggest an investor preference for green bonds which results in a slight emission deficiency compared to demand in several market segments.
Regulatory measures could therefore help to fuel the flow of green bond issuance and thus support the financing of environmental transition.
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