Green Premium in the Primary and Secondary U.S. Municipal Bond Markets

20 Pages Posted: 31 Aug 2018 Last revised: 23 Sep 2018

See all articles by Candace Partridge

Candace Partridge

University College London - QASER Laboratory

Francesca Medda

UCL Institute of Finance and Technology

Date Written: August 22, 2018

Abstract

Green municipal bonds are a growing segment of the US municipal bond market. As they face increasing demand, there have been questions about the performance of green muni bonds relative to their conventional counterparts. In this paper, we perform yield curve analysis on a selection of green-labelled muni bonds that were issued at the same time as conventional muni bonds by the same issuers. We further refine this down to a pair-wise analysis to check the yield differential between pairs of bonds that are identical except for the green label. We find that there is a growing trend towards green premium in both the primary and secondary markets in both the series trend analysis and in the pair-wise analysis.

Keywords: Green Bonds, Municipal Bonds, Infrastructure, Sustainability, ESG, Investment

JEL Classification: R51, G12, O18, Q56

Suggested Citation

Partridge, Candace and Medda, Francesca, Green Premium in the Primary and Secondary U.S. Municipal Bond Markets (August 22, 2018). Available at SSRN: https://ssrn.com/abstract=3237032 or http://dx.doi.org/10.2139/ssrn.3237032

Candace Partridge (Contact Author)

University College London - QASER Laboratory ( email )

London
United Kingdom

Francesca Medda

UCL Institute of Finance and Technology ( email )

London
United Kingdom

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