Green Bond Pricing in the Primary Market: October - December 2017

The report analyzes 23 green bonds totaling USD 15.1bn issued in Q4 2017. It finds that USD green bonds generally achieve higher oversubscription and tighter pricing relative to initial price thoughts than vanilla bonds, while EUR green bonds perform similarly. Approximately 44% of allocations went to green investors. The 'greenium' (pricing inside the yield curve) was observed in only half of a limited sample of six bonds, indicating that a new issue premium is not always avoided. In the secondary market, over half of EUR green bonds outperformed their indices after 28 days, whereas USD green bonds lagged.

• USD green bonds demonstrated stronger primary market demand than vanilla equivalents in Q4 2017, achieving higher average oversubscription (2.7x vs 2.2x) and tighter pricing relative to Initial Price Thoughts (IPT).
• EUR green bonds showed performance similar to vanilla bonds in the primary market, with an average oversubscription of 2.9x compared to 3x for vanilla bonds, and final pricing averaging 11bps tighter than IPT versus 13bps for vanilla.
• Investor allocation for green bonds in the sample averaged 44% for those identifying as green or socially responsible investors, representing a slight decline from 47% in Q3 2017.
• The existence of a 'greenium' (where a bond is issued at a lower yield than existing debt) is inconsistent; in a sample of six bonds, three exhibited a greenium and three exhibited a traditional new issue premium.
• In the immediate secondary market, EUR green bonds generally outperformed their indices, with 66% tightening more than their corresponding index after 28 days, while only 25% of USD green bonds did the same.
• While 14 of 22 issuers in the sample were first-time green bond issuers, the market lacks sector diversity, as all bonds originated from the financial, real estate, and utility sectors.

APA

Harrison, C., & Filkova, M. (2018). Green Bond Pricing in the Primary Market: October - December 2017. Climate Bonds Initiative. https://www.climatebonds.net/files/drupal-files/files/Greenium_Q4-07B.pdf

Chicago

Harrison, Caroline, and Monica Filkova. Green Bond Pricing in the Primary Market: October - December 2017. Climate Bonds Initiative, 2018. https://www.climatebonds.net/files/drupal-files/files/Greenium_Q4-07B.pdf.

Wikipedia

{{cite report |last1=Harrison |first1=Caroline |last2=Filkova |first2=Monica |title=Green Bond Pricing in the Primary Market: October - December 2017 |publisher=Climate Bonds Initiative |date=May 2018 |url=https://www.climatebonds.net/files/drupal-files/files/Greenium_Q4-07B.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{harrison2018green, author = {Harrison, Caroline and Filkova, Monica}, title = {{Green Bond Pricing in the Primary Market: October - December 2017}}, institution = {Climate Bonds Initiative}, year = {2018}, month = may, url = {https://www.climatebonds.net/files/drupal-files/files/Greenium_Q4-07B.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }