The Economics of Sustainability Linked Bonds

Tony Berrada, Leonie Engelhardt, Rajna Gibson, Philipp Krueger

2022 | Academic | Fixed Income

We show that overpriced SLBs experience negative returns in the secondary market after issuance. When firms issue overpriced SLBs, the stock price reaction at issuance is significantly positive, consistent with a wealth transfer from bond- to shareholders...