Abstract

This paper investigates the pricing dynamics of U.S. corporate green bonds issued between 2015 and 2024. While prior literature has mixed findings but often failed to identify a statistically significant greenium—the yield discount associated with green bonds—at issuance, my results reveal a weakly significant greenium in the primary market. More importantly, I document a consistently and highly significant greenium in the secondary market, suggesting that investors increasingly recognize and price in the environmental value of green bonds over time. The novel contribution of this study lies in the construction of a comprehensive green commitment score derived from the textual analysis of bond prospectuses. By categorizing and scoring green bonds based on their disclosed use of proceeds, project evaluation, external review, and reporting/transparency, where use of proceeds and project evaluation are the most significant, I show that bonds with stronger green commitments are associated with larger yield discounts in the secondary market. On the contrary, weak disclosure is associated with no green premium. These findings highlight the growing importance of transparency and credibility in green finance and underscore the role of disclosure quality in shaping bond pricing beyond the primary market.