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Journal of Asset Management

, Volume 19, Issue 6, pp 371–383 | Cite as

Are green bonds priced differently from conventional bonds?

  • Britta Hachenberg
  • Dirk Schiereck
Original Article

Abstract

The young growing market for green bonds offers investors the opportunity to take an explicit focus on climate protecting investment projects. However, it is an open question whether this new asset class is also offering attractive risk–return profiles compared to conventional (non-green) bonds. To address this question, we match daily i-spreads of green-labeled and similar non-green-labeled bonds and look at their pricing differentials. We find that rating classes AA–BBB of green bonds as well as the full sample trade marginally tighter for the respective period compared to non-green bonds of the same issuers. Furthermore, financial and corporate green bonds trade tighter than their comparable non-green bonds, and government-related bonds on the other hand trade marginally wider. Issue size, maturity and currency do not have a significant influence on differences in pricing but industry and ESG rating.

Keywords

Green bond ESG criteria Corporate financial performance Credit rating 

Notes

Acknowledgements

We thank Florian Kiesel, Sacha Kolaric and participants of the Green Summit conference in Liechtenstein for valuable comments.

Supplementary material

41260_2018_88_MOESM1_ESM.docx (21 kb)
Supplementary material 1 (DOCX 20 kb)

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Copyright information

© Springer Nature Limited 2018

Authors and Affiliations

  1. 1.Technische Universitaet DarmstadtDarmstadtGermany

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