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HOW DO THE FINANCIAL CHARACTERISTICS OF GREEN BONDS COMPARE WITH REGULAR BONDS FROM THE SAME ISSUER?

In general, green bonds are priced very close to regular bonds.

The market price of green bonds is determined like any other bond in relation to market conditions at the time of issuance (often relative to reference bond rates). For dollar-denominated bonds, U.S. Treasury Bonds are the reference benchmark.

To compare a green bond with a regular bond would require the issuer to issue them almost simultaneously and with almost identical terms—including currency, structure, yield, and maturity. This is rare. It is generally accepted that green bonds are priced very close to regular bonds; that is, investors are not willing to give up return or pay extra for the green aspect of the bond and related reporting. However, observers of this nascent market point to growing demand and preference for green bonds by a growing number of mainstream investors. Anecdotally, investors in green bonds have been able to sell at higher prices than conventional bonds because of the rarity of green bonds. Depending on demand and supply trends in specific markets, differential pricing for green bonds relative to other bonds could emerge in the future.