The Impact of ECB Corporate Sector Purchases on European Green Bonds

Franziska Bremus, Franziska Schütze and Aleksandar Zaklan ()

No 1938, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: This papers analyzes the effect of the ECB’s Corporate Sector Purchase Programme (CSPP) and the recent Pandemic Emergency Purchase Programme (PEPP) on the yields of eligible green bonds, a new but rapidly growing segment of the corporate bond market. We exploit these policy changes using a difference-in-differences strategy, with ineligible corporate green bonds issued in euro, U.S. dollars and Swedish crowns as comparison groups. We find that both programs significantly improve financing conditions for eligible green bonds, thereby increasing the attractiveness of these instruments to issuers and of the euro area as a location of issuance. The effects of the CSPP and PEPP are heterogeneous, both in terms of average impact and persistence of the effects. Yield differences between eligible and ineligible green bonds can last for more than six months. Our analysis informs the debate about new financing options for firms as well as about effects of asset purchase programs on the transition towards a less carbon-intensive economy.

Keywords: green bonds; bond yields; monetary policy; corporate sector purchase programme (CSPP); pandemic emergency purchase programme (PEPP) (search for similar items in EconPapers)
JEL-codes: E52 E58 G12 G18 Q54 (search for similar items in EconPapers)
Pages: 38 p.
Date: 2021
New Economics Papers: this item is included in nep-cba, nep-eec, nep-env, nep-fmk, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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