Sustainable versus conventional bonds: a comparative analysis of primary market spreads

João Pinto; Diva Ribeiro

Sustainable versus conventional bonds: a comparative analysis of primary market spreads

João Pinto^*
, Diva Ribeiro

^*Corresponding author for this work

Research output: Working paper

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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

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 3 Good Health and Well-being
SDG 10 Reduced Inequalities
SDG 13 Climate Action

Keywords

Bond pricing
ESG
Sustainable bonds
Green bonds
Social bonds
Sustainability bonds
COVID-19

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109032940Final published version, 667 KBLicence: Unspecified

http://hdl.handle.net/10400.14/47466Licence: Unspecified

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 → 31/12/25
Project: Research

Sustainable versus conventional bonds: a comparative analysis of primary market spreads
Pinto, J. & Ribeiro, D., Jun 2026, In: Journal of International Money and Finance. 166, 28 p., 103586.
Research output: Contribution to journal › Article › peer-review

Open Access
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Cite this

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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.",

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Sustainable versus conventional bonds: a comparative analysis of primary market spreads

Abstract

UN SDGs

Keywords

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Projects

CEGE: Research Center in Management and Economics

Research output

Sustainable versus conventional bonds: a comparative analysis of primary market spreads

Cite this