Greeniums ‘narrower’ as investors focus on Covid-19 response

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By Burhan Khadbai, Lewis McLellan
01 Jun 2020

The pricing advantage offered to issuers by green bonds over conventional issuance — the ‘greenium’ — has shrunk during the coronavirus pandemic, making them less attractive for borrowers. Investors have instead dived into buying Covid-19 response bonds, meaning there is a decent premium available for issuers that can sell paper with that label.

“When you look at the green bond class versus the conventional class, there has been a gap in the cost of funds those products usually achieve, but we are not seeing it at the moment,” said Petra Wehlert, head of capital markets at KfW, which has not issued ...

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