Sustainable bonds

: an empirical analysis of spread and pricing

Abstract

This study provides a comprehensive analysis of the credit spreads and pricing for both sustainable and conventional corporate bonds. It examines a dataset that includes 39,457 bonds from 8,753 firms globally, issued between 2018 and 2024. The findings reveal distinct responses between sustainable and conventional bonds regarding standard pricing factors, highlighting that investors consider factors beyond credit ratings. Additionally, the research reveals a significant spread difference between sustainable bonds and their conventional counterparts, a pattern also evident in green, social, and sustainability bonds, as well as on the matched samples. These findings are corroborated in specific regions, including Europe and the United States of America. A key exception arises when comparing financial and non-financial firms; for financial institutions, the differences are statistically insignificant when evaluating sustainable bonds - such as green, social, and sustainability bonds. This indicates that financial entities tend to implement more structured ESG frameworks and risk management practices. Consequently, they may have a more consistent ESG integration in their sustainable bond issuances, which diminishes the statistical differences among bond types when contrasted with non-financial firms that may adopt varied ESG strategies influenced by their specific sectors or operational factors.

Date of Award	8 Jul 2025
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	João Pinto (Supervisor)