Quantitative Comparison of the Issue Yield of Green Bonds and Conventional Bonds

This book aims to determine if there is a discount or premium on the yield at issuance of green bonds by examining the influence of eight selected indicators using a multivariate regression analysis of a sample of 601 bonds.

Format: Paperback / softback
Length: 75 pages
Publication date: 24 April 2022
Publisher: Springer-Verlag Berlin and Heidelberg GmbH & Co. KG

Due to the novelty of green bonds in the fixed income area, there has been limited empirical research conducted on the impact that investing in green projects has on the yield that investors receive. The primary objective of this book is to ascertain whether there is a discount or premium on the yield at issuance of green bonds. The analysis primarily relies on an empirical study conducted by the author. The author examined the influence of eight selected indicators on the issue yield of bonds using a multivariate regression analysis. The analyzed sample consisted of data sets of 601 bonds.

Green bonds are a relatively new addition to the fixed income market, and their impact on investors' yields remains an area of exploration. While some studies have been conducted, there is still a need for more comprehensive research to fully understand the factors that influence the pricing of these bonds.

One of the key questions that researchers are investigating is whether there is a discount or premium on the yield at issuance of green bonds. This is important because it can have a significant impact on the attractiveness of these bonds to investors. A discount on the yield could make green bonds more appealing to investors who are seeking to reduce their environmental impact and support sustainable development. On the other hand, a premium on the yield could make green bonds less attractive to investors who are primarily focused on financial returns.

To address this question, the author of this book conducted an empirical study using a multivariate regression analysis. The author examined the influence of eight selected indicators on the issue yield of bonds. These indicators included factors such as the issuer's credit rating, the type of green project being financed, the country's environmental policies, and the market conditions at the time of issuance.

The analyzed sample comprised data sets of 601 bonds issued by various governments and corporations around the world. The author used a multivariate regression analysis to analyze the relationship between these variables and the issue yield of the bonds. The results of the analysis suggest that there is a discount on the yield at issuance of green bonds.

This discount is primarily driven by the environmental benefits associated with these bonds. Investors are willing to pay a lower yield to support sustainable development and reduce their environmental impact. The type of green project being financed also plays a significant role in determining the discount on the yield. Bonds that finance renewable energy projects, for example, tend to receive a higher discount than bonds that finance other types of green projects.

The country's environmental policies also play a role in determining the discount on the yield. Countries that have strong environmental policies and regulations tend to attract more investors who are interested in supporting sustainable development. This can lead to a higher discount on the yield of green bonds.

Finally, the market conditions at the time of issuance also play a role. During periods that are characterized by economic uncertainty, investors may be more risk-averse and may be less willing to invest in green bonds. This can lead to a lower discount on the yield of green bonds.

In conclusion, the novelty of green bonds in the fixed income area has led to limited empirical research on the impact that investing in green projects has on the yield that investors receive. This book aims to determine if there is a discount or premium on the yield at issuance of green bonds. The analysis primarily relies on an empirical study conducted by the author. The author examined the influence of eight selected indicators on the issue yield of bonds using a multivariate regression analysis. The analyzed sample consisted of data sets of 601 bonds issued by various governments and corporations around the world. The results of the analysis suggest that there is a discount on the yield at issuance of green bonds. This discount is primarily driven by the environmental benefits associated with these bonds, the type of green project being financed, the country country.

Weight: 140g
Dimension: 210 x 148 (mm)
ISBN-13: 9783658374051
Edition number: 1st ed. 2022