New issue concession
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Price reflecting features and market conditions - securities - bonds - yield.
New issue concession is a negative difference in yield between a new bond and a comparable seasoned bond already trading in the secondary market.
It is the investment yield given up by investors, and cost of borrowing saved by issuers.
Yield and bond market price being inversely related, new issue concession is reflected in higher market price for the new bond at its issue.
- New issue premium - new issue concession - greenium
- "The new issue premium is the extra yield that a buyer receives, and a seller pays for a new bond, compared to where seasoned bonds from the same issuer are trading in the secondary market at the time of issuance.
- A new issue premium is a standard feature of the bond market.
- Sometimes, a bond may be issued with a higher price, and thus have a lower yield compared to outstanding debt.
- The bond will price inside its own yield curve.
- This is known as a new issue concession; when present in a green bond, we have termed it greenium.
- This is an excellent outcome for any issuer because it means that it pays less to fund its green bond compared to its vanilla debt."
- Green Bond Pricing in the Primary Market H1 2022 - Climate Bonds Initiative - p9.
