Sub-national governments (SNGs) in developing countries have increasingly explored green municipal bonds as a financing tool, driven by promises of lower borrowing costs, enhanced reputation, and support for sustainable economic development. This study aims to critically examine these claims by analysing the actual costs and complexities associated with green municipal bonds (GMBs). The research involves a comparative analysis of traditional municipal bonds and GMBs, focusing on the financial and operational challenges faced by SNGs. Detailed case studies from Mexico City and Cape Town are used to illustrate the practical implications of issuing GMBs. The findings reveal that, despite similar or slightly lower interest rates, GMBs often entail higher issuance costs due to the need for certification, monitoring, and reporting of green projects […]