The bond carries a tenor of 7 years and a coupon rate of 2.875%, with maturity date set as August 1, 2029. The issuance marks SSE’s fifth green bond in six years, bringing its total outstanding green bonds to more than $2.55 billion. The proceeds from the issue will be used primarily to progress on the company’s offshore wind farms in construction in the UK, such as Dogger Bank, Gordonbush Extension, Viking and Seagreen.
SSE pursues a strategy of issuing green bonds to finance its energy transition-related investments - the instrument accounts for 55% of the group’s debt funding as of March 31. 2022. The company also issues hybrid bonds to help diversify its investor base and support credit rating ratios, with the 50% equity treatment by rating agencies being positive for SSE’s credit metrics. Earlier in 2022, SSE issued a $1.05 billion equity accounted hybrid bond at 4% to refinance the dual tranche debt accounted hybrid bonds issued in March 2017. The company’s debt-focussed strategy has been reinforced by continued volatility in capital markets due to rising inflation, which is caused by a host of macro-economic headwinds including the war in Ukraine.
In Nov’21, SSE announced that it will invest $14 billion through to 2026 on low-carbon infrastructure projects to progress towards net-zero emissions. Under the plan, the company targets to double its net installed renewables capacity to 8 GW by 2026 and hold a development pipeline of more than 15 GW. This includes contributing 25% of the installed offshore wind capacity goal announced by the UK government, which stands at 40 GW by 2030. Further, the company seeks to boost its renewable energy output five-fold by 2031, increasing renewable and other low-carbon generation capacity to more than 16GW, including new flexible technologies such as carbon capture and storage, hydrogen and batteries.
The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.
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