Green Bond Issuance and the Cost of Capital for Indonesian State-Owned Enterprises

Abstract

Using an event-study design around 47 green bond issuances by Indonesian state-owned enterprises between 2019 and 2025, we estimate the announcement effect on the issuer cost of capital. Average abnormal bond spreads narrow by 14 basis points in the ten trading days following announcement, with the effect strongest for first-time issuers.

We interpret the finding as evidence of a modest greenium in an emerging market setting, but caution that the estimate is sensitive to the choice of matched conventional benchmark.