Green Bond Pricing in the Primary Market: July - December 2020

The report finds strong evidence of a 'greenium' (pricing at a lower yield than vanilla equivalents) for 79% of the sampled green bonds in H2 2020. It highlights the success of Germany's twin bond structure and the emergence of the automotive sector as a source of green bonds, while noting that 56% of these bonds were allocated to dedicated green or ESG investors.

• In the second half of 2020, 26 out of 33 green bonds for which yield curves could be constructed priced on or inside their issuer's yield curves, indicating a greenium. This represents 79% of the sample, an increase from 52% in the first half of 2020.
• Green bonds generally attracted higher investor demand than vanilla equivalents. In EUR, average oversubscription was 4.2x compared to 2.9x for vanilla bonds; in USD, it was 3.5x compared to 3.3x.
• An average of 56% of the sampled green bonds were allocated to investors who described themselves as having green or socially responsible mandates, the highest percentage recorded to date.
• Germany's 'twin bond' structure, which issues a green bond with the same coupon and maturity as a conventional bond, resulted in the green bonds maintaining consistently lower yields and lower price volatility than their vanilla twins.
• The automotive sector showed significant potential for green bond growth. In Q3 2020, Daimler, Volkswagen, and Volvo issued debut green bonds that achieved high oversubscription and priced with a greenium.
• In the immediate secondary market, 52% of green bonds tightened more than their comparable vanilla baskets seven days after pricing, and 56% did so after 28 days.
• Green bond ETFs saw substantial growth in 2020, with the Lyxor Green Bond DR UCITS ETF more than tripling in size, contributing to demand pressure in the secondary market.

APA

Harrison, C. (2021). Green Bond Pricing in the Primary Market: July - December 2020. Climate Bonds Initiative. https://www.climatebonds.net/files/documents/publications/Green-Bond-Pricing-in-the-Primary-Market-H2-2020.pdf

Chicago

Harrison, Caroline. Green Bond Pricing in the Primary Market: July - December 2020. Climate Bonds Initiative, 2021. https://www.climatebonds.net/files/documents/publications/Green-Bond-Pricing-in-the-Primary-Market-H2-2020.pdf.

Wikipedia

{{cite report |last1=Harrison |first1=Caroline |title=Green Bond Pricing in the Primary Market: July - December 2020 |publisher=Climate Bonds Initiative |date=March 2021 |url=https://www.climatebonds.net/files/documents/publications/Green-Bond-Pricing-in-the-Primary-Market-H2-2020.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{harrison2021green, author = {Harrison, Caroline}, title = {{Green Bond Pricing in the Primary Market: July - December 2020}}, institution = {Climate Bonds Initiative}, year = {2021}, month = mar, url = {https://www.climatebonds.net/files/documents/publications/Green-Bond-Pricing-in-the-Primary-Market-H2-2020.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }