We examine the pricing difference of Green Bonds (GB) and conventional bonds (CBs) in capital markets worldwide. Credit spread is used to observe whether investors would like to pay a premium for GBs over CBs. This study uses panel data regression with hybrid model to analyse daily observations over the period 2016 to 2017. We employ Option-Adjusted spread (OAS) to measure the credit spreads of bonds while controlling for bond specific, macroeconomic and global factors that influence the spread. With the hybrid model used in the panel data analysis, we were able to capture the fixed-effects of variables in a random effect model. We find that GBs are traded at a premium of 63 basis points (BPS), compared with a comparable corporate bond issue. We find that the green label provides issuers an incentive to raise funds through issuing GBs while providing investors an opportunity to diversify their investments returns. Our findings provide several implications to the major stakeholders driving the GB market to scale up the market to finance the required level of global green investment needs. We stress an urgent need to support the growth of the GB market to achieve sustainable development through mitigating climate change challenges. Abbreviation GB: Green Bond; CB: Conventional Bond; YS: Yield Spread; BPS: Basis Points; OAS: Option-Adjusted Spread; PCSE: Panels Corrected Standard Errors; CPI: Consumer Price Index; GBPs: Green Bond Principles; CBS: Climate Bond Standard.
In contrast with many other countries, Chinese listed firms must obtain approval to make private-equity placements (PEPs) from the Chinese Security Regulatory Commission (CSRC), a state bureau that regulates capital market financing. We analyse the role of political connection (PC) and ownership structures when accessing private equity (PE) market, while investigating the mechanisms through which political ties operate within the regulatory process of PEPs. The findings suggest that PCs do not contribute to the firm's decision to apply for PEPs, but firms with state-ownership demonstrate a higher propensity to apply for PEPs. PC and state-ownership appear to help firms to obtain approval from the CSRC, and these firms are treated more favourably than their rivals without such connections. Politically connected firms spend less time in managing bureaucracy, but PC and state-ownership negatively affect proceeds from the PE market in China. Firms with politically connected directors with professional business backgrounds tend to spend less time managing the CSRC, and these professionals positively affect proceeds from the PE market in China. This study provides important insights for policy-makers, investors, PE issuing firms and security market regulators.