Green Bond Pricing in the Primary Market: H1 (Q1-Q2) 2018

January - June 2018


A semi-annual report assessing green bond pricing that commenced in January 2016 and is prepared on a joint basis with the International Finance Corporation (IFC). 

The report identifies Q1 2018 as the first period in which green bonds have performed better than vanilla equivalents in both EUR and USD in terms of having larger book cover and greater spread compression. 17 out of 23 EUR green bonds and 6 out of 6 USD bonds had larger oversubscription than vanilla equivalents.

This follows detailed analysis of the performance of 31 green bonds at issue during H1 2018 comprising 23 EUR and 6 USD denominated benchmark size (USD500m or EUR equivalent) green bonds with a total value of USD29.4bn.  

The report includes a spotlight on emerging market green bonds and overview on Green Bond Exchange Traded Funds (ETFs) for the first time.

Download the report here.




Highlights from H1 2018:

  • 23 EUR and 6 USD labelledgreen bonds issued in H1 2018 were analysed
  • 11 out of 28 issuers are first time green bond issuers. TenneT issued two green bonds, and other repeat green bond issuers are Iberdrola, Poland, EIB, NAB and MidAmerican Energy
  • Green bonds achieve greater spread compression, and larger book cover during pricing than vanilla equivalents on average
  • Green bonds in H1 2018 priced either on or outside their yield curves
  • 55% of green bonds were allocated to investors declaring themselves green, the most we have seen so far. Non-mandated investors continue to support the market
  • Green bonds tend to tighten more than vanilla benchmarks in the immediate secondary market
  • Green bond issuers continue to extol the virtues of going green
  • Spotlight on investment grade Emerging Market green bond issuers

The first Green Bond Pricing Report examining eligible green bonds from 2016 and Q1 of 2017 was released in August.  In November 2017, we published a report covering Q2 2017, in February 2018 the report for Q3 2017 and in May 2018 the report for Q4 2017.