GREEN BOND PRICING IN THE PRIMARY MARKET

The report finds that green bonds in EUR and USD generally outperformed vanilla equivalents in H2 2022, exhibiting higher book cover and greater spread compression. While the incidence of an outright 'greenium' (pricing inside the yield curve) decreased due to macroeconomic volatility, green bonds still achieved relatively tighter pricing than matched vanilla pairs. Approximately 67% of these bonds were allocated to green or responsible investors. The report also notes a trend of auto manufacturers increasing their use of green labels and a net growth of 11.2% in green bond ETF assets.

• Green bonds in both EUR and USD markets generally achieved higher oversubscription (book cover) and more significant spread compression during the pricing process than their vanilla equivalents. In EUR, green bonds averaged 3.6 times oversubscription compared to 3.0 times for vanilla bonds, while in USD, green bonds averaged 5 times compared to 3 times for vanilla bonds.
• In the immediate secondary market, green bonds showed stronger tightening trends than vanilla baskets and indices. After seven days, 59% of green bonds tightened more than their vanilla baskets, and after 28 days, 55% did the same.
• An average of 67% of the green bonds in the sample were allocated to investors who identify as having green or socially responsible investment mandates, a figure that has remained stable throughout 2021 and H1 2022.
• While the occurrence of an outright 'greenium'—where a bond prices inside its own yield curve—became less common in H2 2022 due to market volatility, a matched pair analysis indicates that green and other thematic bonds (social, sustainability, and SLBs) still priced tighter than their nearest-neighbour vanilla equivalents.
• Auto manufacturers are increasingly using green labels to fund clean technologies, with Volkswagen reaching the largest total green liabilities for an auto manufacturer at EUR7.4bn (USD6.8bn).
• Total fund assets for EUR and USD green bond ETFs grew by 11.2% during H2 2022, ending the period at USD1.9bn, following two previous periods of net outflows.
• Sovereign green bond activity in H2 2022 included new issuances from Austria, Belgium, Germany, Hungary, Italy, and the EU totaling USD23.7bn. Notably, Austria issued the first sovereign green money market instrument (a Treasury Bill) in October 2022.

APA

Harrison, C. (2023). GREEN BOND PRICING IN THE PRIMARY MARKET. Climate Bonds Initiative. https://www.climatebonds.net/files/documents/publications/Green-Bond-Pricing-in-the-Primary-Market-H2-2022.pdf

Chicago

Harrison, Caroline. GREEN BOND PRICING IN THE PRIMARY MARKET. Climate Bonds Initiative, 2023. https://www.climatebonds.net/files/documents/publications/Green-Bond-Pricing-in-the-Primary-Market-H2-2022.pdf.

Wikipedia

{{cite report |last1=Harrison |first1=Caroline |title=GREEN BOND PRICING IN THE PRIMARY MARKET |publisher=Climate Bonds Initiative |date=March 2023 |url=https://www.climatebonds.net/files/documents/publications/Green-Bond-Pricing-in-the-Primary-Market-H2-2022.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{harrison2023green, author = {Harrison, Caroline}, title = {{GREEN BOND PRICING IN THE PRIMARY MARKET}}, institution = {Climate Bonds Initiative}, year = {2023}, month = mar, url = {https://www.climatebonds.net/files/documents/publications/Green-Bond-Pricing-in-the-Primary-Market-H2-2022.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }