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More than ever, green bonds are the focus of attention and the curiosity they are arousing is equalled by the questions they have raised. These instruments, which are geared towards "green" projects, have emerged as a market segment of their own at a time when questions about the integrity and sustainability of investments are becoming increasingly pressing.

At the heart of discussions are market size and composition, liquidity and above all the greenium (a contraction of green and premium). The greenium - i.e. the yield that investors concede to companies issuing a green bond compared to the performance they would have required from these same companies for a conventional bond with the same maturity - was long perceived as volatile, hovering in one direction or another, before finally settling down visibly in 2020.

For Mirova’s green bonds experts, greenium are above all dynamic and therefore require constant monitoring if we are to reap their benefits.

Highlights

  • Unstoppable Green Bonds: green bonds keep breaking new records. This market only represents around 2% of the bond market but was responsible for almost 17% of flows in 2020 (excluding sovereign issuers)
  • The greenium under the microscope: Mirova's proprietary green bond valuation model according to various criteria allows to hone the greenium’s analysis
  • Monetising the greenium: greenium’s analysis can help investment managers approach an increasingly vast market
Written in March 2021.

This material has been provided for information purposes only to investment service providers or other Professional Clients, Qualified or Institutional Investors and, when required by local regulation, only at their written request. This material must not be used with Retail Investors.

This document does not constitute or form part of any offer, or solicitation, or recommendation to subscribe for, or buy, or concede any shares issued or to be issued by the funds managed by Mirova.

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