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Decoding climate-related risks in sovereign bond pricing: a global perspective

Sovereign yields are often the strongest reference for corporate debt markets and investment decisions in each country. Shocks impacting sovereign solvency therefore pose great concerns for the economy and financial stability. Weather disasters are especially relevant shocks because their timing is unpredictable and imply significant damage to infrastructure, economic activity and humanitarian losses. This work shows how sovereign yields across the globe react to transition risks and physical climate risks. […]