Denmark is preparing to issue the first government bond aligned with the new EU Green Bond Standard. This will be in a ‘twin bond’ format, meaning the green instrument will be paired with a conventional counterpart.
In this paper, we review twin bonds issued by Denmark, Germany, Colombia, and Japan to see how certain design choices, like convertibility, may affect the persistence – and level – of greenium.
We find that unique features have the potential to drive pricing differentials, and that the explicit convertibility between green and conventional pairs offered by Denmark helps support their green bonds’ tradability.
Based in London, Jonas researches the role of fixed income markets in the climate transition, focusing on key sectors, sovereigns and development finance. He previously worked in emerging markets fixed income at Morgan Stanley Investment Management and UBS.
Based in London, Jo leads AFII’s research and a global team supporting fixed income investors as they align their portfolios with climate and sustainability goals. She joined AFII after 18 years in fixed income markets at JPMorgan.
