Search

The role of green financing in propelling corporate green transformation and sustainable growth has attracted a lot of interest. Regarding their function in promoting corporate green transformation, green bonds—a crucial part of green finance—pose an important research question. This study, targeting Chinese A-share listed corporates, employing double machine learning models, aims to delve into the impact and mechanisms of green bond issuance on corporate green transformation. The findings indicate that issuing green bonds significantly drives corporate green transformation, especially in state-owned, smaller-scale, and non-manufacturing firms, where the impact is more evident. Further analysis discloses that green bond issuance primarily facilitates corporate green transformation through its functions in green investment and financing, green regulatory compliance, and green governance. This study serves as a theoretical reference, guiding businesses in seizing emerging opportunities in the green bond market and actively undertaking green transformation projects, thereby catalyzing a comprehensive economic transition. [ABSTRACT FROM AUTHOR]

This paper examines the determinants of recovery rates of corporate defaulted bonds in the emerging markets. We use data on defaulted bonds from Moody's ultimate recovery database over the period 2005–2015 to experiment the impact of the borrower characteristics added to the macroeconomic and the bond market conditions on recovery rates. We find evidence that bond recovery rates in emerging and developed countries do not depend on the same factors. Our results show that bond recovery rates in developing countries seem to depend much more on specific characteristics of firms. The financial crisis has affected more significantly subordinated bond recovery rates than secured bonds in emerging markets. [ABSTRACT FROM AUTHOR]

This paper explores the pricing implications of green bonds in the Chinese corporate bond market. We document a large greenium in the Chinese green bond market, whereby green bonds are issued at lower offering yield spreads in the primary market and traded at lower yields in the secondary market. The magnitude of the Chinese greenium is substantially greater than other international green bond markets. Exploring the underlying mechanisms, we document convincing evidence that mitigation of information asymmetry and exposure to salient environmental stimuli such as air pollution are plausible explanations of the greenium. • Green certification has pricing implications in the Chinese corporate bond market. • This study documents a greenium in the Chinese bond market. • Green bonds are issued at lower offering yield spreads in the primary market. • Green bonds are traded at lower yields in the secondary market. • The Chinese greenium is greater than other international green bond markets. [ABSTRACT FROM AUTHOR]

We investigate the relationship between exposure to climate change and firm credit risk. We show that the distance-to-default, a widely used market-based measure of corporate default risk, is negatively associated with the amount of a firm's carbon emissions and carbon intensity. Therefore, companies with high carbon footprint are perceived by the market as more likely to default, ceteris paribus. The carbon footprint decreases the distance-to-default following shocks - such as the Paris Agreement - that reveal policymakers' intention to implement stricter climate policies. Overall, these results indicate that the exposure to climate risks affects the creditworthiness of loans and bonds issued by corporates. Financial regulators and policymakers should consider carefully the impact of climate change risks on the stability of both lending intermediaries and corporate bond markets. • We study the relationship between exposure to climate change and credit risk. • Corporate default risk is positively associated with carbon footprint. • The positive relationship is stronger following the Paris Agreement. • Climate risks threaten stability of lending intermediaries and bond markets. [ABSTRACT FROM AUTHOR]