The impact of ESG news sentiment on green bond credit spreads: Signal transmission and market response

Key Points

• Market response shows that ESG news sentiment significantly affects green bond credit spreads.
• Credit spreads adjusted by 12 basis points for every 1-unit change in sentiment score during the analysis period.
• Observational analysis explored how ESG sentiment influences the fixed income market for green bonds.
• Implications highlight the need for understanding ESG factors in financial decision-making and investment strategies.