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Abstract
This paper offers a comparative analysis of the credit spreads and pricing of sustainable and conventional corporate bonds. Using a cross-section of 30,368 bonds issued by 8,267 nonfinancial firms globally between 2012 and 2022, we find that sustainable and conventional bonds react differently to common pricing factors. Notably, investors rely less on credit ratings when pricing sustainable bonds compared to conventional bonds. We also find no significant difference in the spreads of sustainable bond tranches relative to similar conventional bonds. This result holds across green, social, and sustainability bonds, as well as in a matched sample of conventional bonds. Furthermore, our findings are consistent across both pre-COVID and COVID periods, indicating that issuing firms do not use sustainable bonds as a strategy to lower borrowing costs.
| Original language | English |
|---|---|
| Number of pages | 48 |
| Publication status | Published - 14 Nov 2024 |
Keywords
- Bond pricing
- ESG
- Sustainable bonds
- Green bonds
- Social bonds
- Sustainability bonds
- COVID-19
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Dive into the research topics of 'Sustainable versus conventional bonds: a comparative analysis of primary market spreads'. Together they form a unique fingerprint.Projects
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CEGE: Research Center in Management and Economics
Silva, M. (Full Professor), Sousa, R. (Full Professor), Alves, P. (Assistant Professor), Madsen, A. (Invited Assistant Professor), Lourenço, A. (Associate Professor), Carvalho, A. S. (Associate Professor), Andrade, A. (Assistant Professor), Silva, P. D. (Associate Professor), Vlačić, B. (Invited Assistant Professor), Martins, C. (Invited Assistant Professor), Gomes, C. (Auxiliary Researcher), Gevrek, Z. E. (Invited Assistant Professor), Oliveira, F. G. D. (Associate Professor), Faria, G. (Invited Associate Professor), Marreiros, H. (Scholarship holder), Pinho, J. (Invited Assistant Professor), Machado, J. (Associate Professor), Araújo, J. (Auxiliary Researcher), Pinto, J. (Assistant Professor), Rego, A. (Full Professor), Gaspar, J. M. (Auxiliary Researcher), Corbo, L. (Invited Assistant Professor), Costa, L. (Associate Professor), Fernandes, L. (Assistant Professor), Sottomayor, M. (Assistant Professor), Martins, N. (Full Professor), Hernández-Marrero, P. (Auxiliary Researcher), Gonçalves, R. (Associate Professor), Ribeiro, R. (PI), Coelho, S. L. (Assistant Teacher), Pereira, S. M. (Auxiliary Researcher), Silva, S. (Associate Professor), Rodrigues, V. (Associate Professor), Sotiros, D. G. (Auxiliary Researcher), Valverde, C. (Assistant Professor), Leitão, A. (Assistant Professor), Julião, J. (Assistant Professor), Tavares, M. (Assistant Professor), Lages, C. R. (Auxiliary Researcher), Elmashhara, M. G. (Auxiliary Researcher) & Teymourifar, A. (Auxiliary Researcher)
1/01/20 → 31/12/24
Project: Other