Dasharathraj K. Shetty

Over the years, green finance tools have gained considerable attention with the increased concern to achieve sustainability in the economy. Green bonds are one such new innovative green finance tool embodied with bonds and green attributes. However, research on the Indian green bond is relatively modest. Thus, this study aims to analyze the impact of bond attributes on green bond yield. The study retrieves green bond data from the Bloomberg and Climate Bonds Initiative databases from 2015 to 2022. To test the framed hypotheses, the study employs a panel regression technique with a random effect model. The findings of the study show a significant positive effect of bond ratings (β = 2.80926, p < 0.05) on green bond yield based on the argument that good-rated bonds serve as collateral in the security market. On the contrary, the result also reveals a significant negative effect of bond maturity (β = –0.327296, p < 0.05) and bond label (β = –3.16480, p < 0.05) on green bond yield. The results based on the observation suggest that when the certified bond is issued, this signals the greenness of the bond in the market and attracts high demand, whereas the long maturity ensures the green project construction for a longer period, resulting in a lower bond value. Thus, empirical findings reveal that bond attributes are the major factors in influencing bond yield. The obtained results serve as a prerequisite for potential issuers, investors, and policymakers to further popularize the green bond in the country.

Despite numerous studies in the domain of green bonds, a paucity of literature concentrates on emerging countries’ green bonds. To fill this void, this study aims to examine the factors influencing green bond yield in the Asian and Latin American contexts. The data are compiled from the Bloomberg and Fred databases between 2017 and 2022. The panel regression with the Generalized Least Square method was employed. The results reveal that Asian green bonds provide higher yields with less risk to their investors than Latin American green bonds. The regression results of Asian green bonds show negligible effects of all factors, except coupon rate with a positive effect (β = 0.844), indicating its remarkable influence on green bond yield. However, the findings of Latin American green bonds uncover that coupon (β = 0.780), maturity (β = 0.025), and bond rate (β = 2.472) surpass the green bonds yield due to their positive effects, whereas issue size (β = –1.215) causes a reduction in the green bonds yield with their negative effect. Further, Environmental, Social, and Governance disclosure shows a positive (β = 1.611) effect, indicating better yield for investors due to their potential power to vanish greenwashing in these markets. Moreover, interest rate and GDP exert significant positive (β = 0.141) and negative (β = –0.030) effects on green bond yield, respectively. This observation implies that higher lending rates increase bond yield, whereas GDP-led growth provides lower yield due to better economic prospects and high investor demand for the bonds.

Acknowledgment
The authors are grateful to Manipal Academy of Higher Education (MAHE), Manipal, for providing financial assistance in the form of a “JRF Contingency Grant” for this research article.