Squeeze On ‘Greenium’ As ESG Bond Investors Demand More Value

The market in sustainable debt is growing but issuers are being challenged on margins

• Investors have long been willing to pay a premium for green bonds, rewarding companies or governments that want to clean up their act by giving them lower borrowing costs.

• Figures from the Association for Financial Markets in Europe suggest greeniums are shrinking in Europe’s corporate bond market — one of the more advanced markets for green issuance. Spreads on ESG corporate bonds versus their “non-sustainable” or conventional counterparts have narrowed to less than one basis point — a 100th of a percentage point — in recent months, having climbed as high as nine basis points in 2020.

Source: https://www.ft.com/content/ecbed322-1709-4ed6-9f7f-d974f6e181da