Gustavo Bernal Torres
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.