Green Bond Boom Sees ‘Brownium’ Penalty for Conventional Notes
- Daimler, Orange sold ESG bonds cheaper than traditional debt
- Investors are piling in to rush of bond deals seen to do good
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Companies joining Europe’s booming green-bond market are reaping cost benefits alongside environmental ones, giving rise to a so-called brownium charge for conventional debt sales.
Volkswagen AG, Daimler AG and Orange SA priced bonds with environmentally friendly elements this month at significantly cheaper cost than their existing debt. And with demand surging for notes that are seen to do good, it means there’s effectively a pricing penalty if an issuer opts to sell non-green, or conventional, debt.