The Sovereign Greenium: Global Evidence and LAC Perspectives

This technical note examines the presence and magnitude of sovereign greeniums - the yield discount that green bonds command relative to conventional bonds - with a focus on Latin American and Caribbean (LAC) markets. Using panel regression analysis of bond pricing data, this note finds that LAC sovereign green bonds trade at an average discount of 2.2 basis points compared to similar conventional bonds, which is modest but statistically significant. This greenium is smaller than the 6.3 basis points observed in advanced economies, reflecting differences in market depth, investor base composition, and institutional frameworks. The findings suggest that while LAC sovereigns can achieve financing benefits from green bond issuance, success depends critically on credible frameworks, external verification, and programmatic issuance strategies.