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The greenium in high-rated euro bonds

Institutional investors who want to shape their investment portfolio to meet their ESG goals are increasingly turning to green bonds. Green bonds are intended to exclusively finance projects that have a positive environmental impact.

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    Strategist
    Portfolio Manager

Samenvatting

  1. The green bond market has grown into a liquid and diversified market
  2. Green bonds are intended to exclusively finance projects that have a positive environmental impact
  3. Increased issuance means that it is now possible to build a sizable portfolio in this market

As a result, these bonds use their proceeds differently, and have unique certification and reporting standards. They also have a distinct investor approach, which can lead to differences in pricing. Roughly half of EUR-denominated green debt is issued by Eurozone governments and government-related institutions such as supranationals, sovereigns and agencies (SSA). In this article, we examine the premium of green bonds for these two groups.

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