The evolution of pricing performance of green municipal bonds

摘要

In this study, we investigated the performance of US green municipal bond compared with general municipal bonds. The performance of this bond sector was assessed with two different approaches: through the creation and benchmarking of a green municipal bond index; and by looking for differences in yields between green municipal bonds and their conventional counterparts. We found that an index comprised of green muni bonds outperforms the closest equivalent S&P index from 2014 to 2018, and there is a statistically significant green premium (greenium') present in the secondary muni bond market of 5 basis points by 2018. There was no conclusive evidence for the presence of greenium at issue in the primary market, but there are some early signs that this could change. These results are key to encouraging growth in the green municipal bond market, which can help American cities to unlock more capital for more sustainable infrastructure projects.