JOURNAL: Are green bonds special?
Summary
Authors:
Amir Amel-Zadeh
Rik Lustermans
Mary Pieterse-Bloem
David J. Dekker
Dimitris Christopoulos
University of Oxford
Vrije Universiteit Amsterdam
Erasmus Research Institute of Management (ERIM)
Heriot-Watt University
Are green bonds special?
SSRN
September 2024
This paper examines how green bonds trade in the European market compared to conventional bonds. Using data from 2017 to 2023, it finds that green bonds tend to be more liquid, have smaller price differences between buying and selling, and are less affected by market shocks. However, high demand and limited supply can make them harder to buy. Interestingly, issuing green bonds also benefits a company’s conventional bonds by improving their liquidity and stability. Green bonds respond like other bonds to credit downgrades but react more negatively to environmental controversies, suggesting that investors value both financial returns and sustainability.