Green Bond Pricing in the Primary Market: January - June 2020

The report analyzes 46 green bonds (USD 37bn) issued in H1 2020. It finds that green bonds generally outperformed vanilla equivalents in terms of book cover and spread compression, particularly in the EUR market. Despite a general market sell-off during the COVID-19 pandemic, green bonds maintained sufficient liquidity and showed resilience. Approximately 55% of allocations went to green or socially responsible investors. While the 'greenium' (pricing inside the yield curve) was less consistent than in H2 2019, 11 of 21 bonds with buildable yield curves priced on or inside their curves. The report also highlights the emergence of the communications sector, exemplified by Swisscom, and the growth of green bond ETFs.

• Green bonds in EUR and USD generally achieved higher oversubscription (book cover) and greater spread compression than their vanilla equivalents during the first half of 2020.
• In the EUR market, 79% of green bonds had larger oversubscription than vanilla equivalents, with an average oversubscription of 5.2x compared to 3.1x for vanilla bonds. Spread compression for EUR green bonds averaged 25bps, while vanilla bonds averaged 20bps.
• USD green bonds also outperformed vanilla equivalents in spread compression, averaging 20bps compared to 18bps for vanilla bonds, though their average book cover (2.6x) was slightly below the historical average of 2.7x.
• On average, 55% of the funds raised from the sampled green bonds were allocated to investors identifying as green or socially responsible, an increase from 50% in H2 2019.
• Regarding the 'greenium', 11 out of 21 green bonds for which yield curves could be constructed priced either on or inside their yield curves; five specifically exhibited a greenium (pricing inside the curve).
• Green bonds demonstrated resilience during the COVID-19 sell-off (February 20 to March 23, 2020), preserving sufficient liquidity to be transacted while other bond types saw liquidity dry up.
• In the immediate secondary market, 63% of green bonds tightened more than comparable vanilla baskets seven days after pricing, and 59% did so after 28 days.
• Green bond ETFs showed strong growth and stability in H1 2020; for instance, the Lyxor Green Bond ESG screened fund grew by 150% between December 2019 and June 2020, and Lyxor reported no outflows during the March volatility.
• The communications sector is an emerging area for green bonds, with Swisscom becoming the fifth organization in the sector to issue one, achieving a 10x book cover.

APA

Harrison, C. (2020). Green Bond Pricing in the Primary Market: January - June 2020. Climate Bonds Initiative. https://www.climatebonds.net/files/documents/publications/Green-Bond-Pricing-in-Primary-Market-H1-Q1-Q2-2020.pdf

Chicago

Harrison, Caroline. Green Bond Pricing in the Primary Market: January - June 2020. Climate Bonds Initiative, 2020. https://www.climatebonds.net/files/documents/publications/Green-Bond-Pricing-in-Primary-Market-H1-Q1-Q2-2020.pdf.

Wikipedia

{{cite report |last1=Harrison |first1=Caroline |title=Green Bond Pricing in the Primary Market: January - June 2020 |publisher=Climate Bonds Initiative |date=September 2020 |url=https://www.climatebonds.net/files/documents/publications/Green-Bond-Pricing-in-Primary-Market-H1-Q1-Q2-2020.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{harrison2020green, author = {Harrison, Caroline}, title = {{Green Bond Pricing in the Primary Market: January - June 2020}}, institution = {Climate Bonds Initiative}, year = {2020}, month = sep, url = {https://www.climatebonds.net/files/documents/publications/Green-Bond-Pricing-in-Primary-Market-H1-Q1-Q2-2020.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }