Green curve: Difference between revisions
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:There is no reason why a bond being green should impact its price, since green bonds rank pari-passu (on equal footing) with bonds of the same payment rank and issuer. | :There is no reason why a bond being green should impact its price, since green bonds rank pari-passu (on equal footing) with bonds of the same payment rank and issuer. | ||
: | :[However, there] is no credit enhancement to explain pricing differences and issuers of green bonds often incur costs such as Second Party Opinions and Certification, although these are typically negligible. | ||
:Green bonds and vanilla equivalents are subject to the same market dynamics..." | :Green bonds and vanilla equivalents are subject to the same market dynamics..." |
Revision as of 16:05, 8 September 2021
Securities - borrowings - pricing - ESG.
A green curve describes the prices of green securities trading in the secondary market, differentiated by their maturities.
Green curve is an abbreviation for green yield curve.
- UK to build out green curve
- "It was announced at Budget 2021 that the government will issue its first sovereign green bond - or green gilt - this summer, with a further issuance to follow later in 2021 as the UK looks to build out a 'green curve'."
- Green gilt issuance, UK Debt Management Office
- Germany to create a green curve
- "Germany's green debt plan differs from peers such as France and the Netherlands in that each green bond sold will be matched with a conventional twin...
- The structure will show investors the exact cost of going green. Until now, gauging the green premium meant examining an issuer’s regular yield curve to gauge where a hypothetical conventional bond identical to the green bond in question might trade.
- 'For the first time, we will be able to exactly see what the (green) premium looks like without having to do any maths, except for a simple "minus" calculation, one yield minus the other,' said Christoph Rieger, head of rates and credit research at Commerzbank in Frankfurt...
- ... accurately gauging relative issuance costs should convince more borrowers of the financial benefits of going green, said Piet Christiansen, chief strategist at Danske Bank in Copenhagen.
- So Germany’s structuring of this issue could well be key in drawing more borrowers to the green market.
- 'When Germany will (create) a green curve, then this is what we will price the green projects off of. So it is really that there will be a benchmark of where green pricing will be, going forward,' Danske’s Christiansen said."
- Reuters - Yoruk Bahceli - 2 September 2020
- 26 out of 33 green bonds priced on or inside their yield curves
- "The new issue premium is the [difference in yield] for a new bond compared to where seasoned bonds from the same issuer are trading in the secondary market at the time of issuance...
- There is no reason why a bond being green should impact its price, since green bonds rank pari-passu (on equal footing) with bonds of the same payment rank and issuer.
- [However, there] is no credit enhancement to explain pricing differences and issuers of green bonds often incur costs such as Second Party Opinions and Certification, although these are typically negligible.
- Green bonds and vanilla equivalents are subject to the same market dynamics..."
- Green bond pricing in the primary market - July to December 2020 - Climate Bonds Initiative