AB: Understanding Green Bond Performance in Market Setbacks
NORTHAMPTON, MA | ACCESSWIRE | September 30, 2022 | AllianceBernstein Green bonds have gained a reputation for providing better downside mitigation than their conventional peers. But in this year''s market downturn, green bonds'' defensive performance patterns were mixed. What does this mean for investors? We believe that the greater performance dispersion we''ve seen so far in 2022 makes a strong case for an active approach to investing in green bonds. With so many green bonds outstanding today, investors need sharper insights to help differentiate among them and to better understand each bond''s performance characteristics. Getting a Grip on the Greenium Green bonds have typically been more highly valued than their conventional counterparts, and consequently have generally traded at somewhat higher prices and lower yields. Expressed differently, a green bond typically exhibits a negative yield premium to conventional peers, also known as a "greenium." When a green bond''s greenium gets bigger (negative yield premium becomes more negative), it outperforms comparable conventional bonds.
AB: Understanding Green Bond Performance in Market Setbacks
NORTHAMPTON, MA | ACCESSWIRE | September 30, 2022 | AllianceBernstein Green bonds have gained a reputation for providing better downside mitigation than their conventional peers. But in this year''s market downturn, green bonds'' defensive performance patterns were mixed. What does this mean for investors? We believe that the greater performance dispersion we''ve seen so far in 2022 makes a strong case for an active approach to investing in green bonds. With so many green bonds outstanding today, investors need sharper insights to help differentiate among them and to better understand each bond''s performance characteristics. Getting a Grip on the Greenium Green bonds have typically been more highly valued than their conventional counterparts, and consequently have generally traded at somewhat higher prices and lower yields. Expressed differently, a green bond typically exhibits a negative yield premium to conventional peers, also known as a "greenium." When a green bond''s greenium gets bigger (negative yield premium becomes more negative), it outperforms comparable conventional bonds.