Mark Gilbert , Columnist

The Explosion in Green Bonds Comes Without a Premium

The growing market for debt to finance environmentally sound projects has a puzzling pricing feature.

October 28, 2019 at 6:00 AM UTC

Mark Gilbert is a Bloomberg Opinion columnist covering asset management. A former London bureau chief for Bloomberg News, he is author of “Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable.”

Is the promise of green premiums just a lot of hot air?
Photographer: Carla Gottgens/Bloomberg

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Given the undoubted and seemingly unbridled enthusiasm for green bonds, why don’t they trade at a premium to their less environmentally friendly counterparts in the debt markets? After a reader posed that question to me a few weeks ago, I’ve struggled to come up with a coherent answer.

The market for green bonds has exploded, with global sales increasing by more than 300% in the past five years to reach $162 billion this year.