Where's the greenium?

Abstract

the u.s. municipal green bond market: an examination of the use of proceeds jamison friedland the leonard n. stern school of business glucksman institute for research in securities markets faculty advisor: jeffrey wurgler april 15, 2020 the u.s. municipal green bond market: an examination of the use of proceeds jamison friedland abstract green bonds represent a new financial product line developed with the goal of allocating more capital towards projects that have positive environmental and/or climate benefits. green bonds have all the characteristics of traditional bonds with the additional feature designating that the “use of proceeds” from the bond goes toward driving positive environmental outcomes. the issuance of green bonds by both governments and businesses has been growing and is expected to reach $300bn usd in 2020. however, despite the increase in issuance, there is a lack of clarity on whether green bonds are actually allocating new capital toward environmentally beneficial projects or if projects that would have likely received funding anyway are simply adopting the green labeling. in this study, we consider a sample of more than 2,000 green bonds issued over the 20102016 period. we analyze the official statement filings for each bond and among other screens, record whether each bond provides “new capital” or if the green bond was issued to refund an existing bond. our results suggest that as much as 60% of green bonds reflect refunded or continuing projects …

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