SSEN Transmission has successfully issued its second green bond, a £500m, 7- and 15-year, dual tranche eurobond with £250m maturing in March 2028 and £250m in March 2036 at coupons of 1.50 per cent and 2.125 per cent respectively.
Today's issuance is SSE's fourth green bond in five years and reaffirms its status, ahead of the critical COP26 climate summit in November, as the largest issuer of green bonds from the UK corporate sector. It remains the only UK corporate to offer up multiple green bonds and the latest issuance brings the total outstanding to £2bn.
The proceeds are earmarked to fund part of SSEN Transmission's programme of critical investments in transmission network infrastructure that will help accommodate the significant increase in renewables required to achieve the transition to net zero emissions - including the development of strategic infrastructure required to enable the UK Government's ambition for enough offshore wind to power every home with renewable energy by 2030.
At the same time, SSE has published a new framework through which it intends to issue its first sustainability-linked bond in due course. Unlike a green bond, where proceeds are ringfenced for qualifying low-carbon investments, a sustainability-linked bond would set a coupon based on a commitment from the company to achieve certain sustainability-related KPIs; failure to do so would see a step-up in the coupon.
"Investments in low-carbon infrastructure like those we are making in our Transmission business are a win-win for the economy and climate. By financing this investment through green bonds and - potentially in the future - sustainability-linked bonds, we are helping to attract more capital into initiatives that will drive progress towards net zero while holding ourselves to account on wider sustainability efforts. This funding is consistent with our commitment to maintain a strong balance sheet and investment grade credit rating, and underlines our commitment to green finance - just as the UK seeks to show leadership in this important area in the run-up to COP26."
Gregor Alexander, SSE Finance Director
SSE was advised on the updates to its green bond and sustainability-linked bond frameworks by global financial services group BBVA.
Angel Tejada, Head of Green and Sustainable Bonds at BBVA, said: "Ahead of COP26, BBVA is delighted to have collaborated with SSE in the update and structuring of their green bond and sustainability-linked bond frameworks. We believe that these frameworks will enable companies to take their sustainability agenda to the next level."
Shaun Walden, Project Director at DNV, who provided the Second Party Opinion on new sustainability-linked bond framework, said: "In establishing its new sustainability-linked bond framework, SSE is putting itself in the vanguard of innovation around green finance and its framework is among the most comprehensive we have seen to date. Investors are increasingly looking for robust mechanisms through which they can ensure their investments are sustainable and take account of climate-related risks, and SSE is now well positioned to meet that demand."