Do Investors Pay Green Bonds Premium?

Student: Mikhaylova Anna

Educational Programme: Corporate Finance (Master)

Year of Graduation: 2020

In this paper the yield premium of green bonds is examined. Regression model method and the necessary econometric tests were used in the purpose of analysis. The sample contains data on green issues and comparable non-green bonds issued from 2008 to March 2020. The results of the research show the presence of small but statistically significant negative premium on green bonds of 23,4% comparing to expected level measured in percent points. According to the study, the negative premium on green bonds is more pronounced for issuers from developed countries (27%) than from issues of issuerss from developing ones (18%). In the course of the work, it was also revealed that green bonds have a higher degree of liquidity than non-green bonds (the difference between ask and bid prices for green bonds is 47,9% less than non-green bonds, which suggests that they are more actively traded and have higher liquidity).

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