SSE plc has entered the Australian bond market for the first time, raising A$1 billion (£520 million) through two green “Kangaroo” bonds. The issuance comprises a five-year A$600 million bond with a 5.6% coupon and a 10-year A$400 million bond with a 6.3% coupon. Strong investor demand made the transaction 2.5 times oversubscribed, creating the third-largest senior corporate Kangaroo order book on record. The issuance brings SSE’s total outstanding green bonds to £5.9 billion.
Key Overview
- SSE raised A$1 billion (£520 million) through its first Australian green bond issuance.
- The transaction was divided into five-year and 10-year tranches.
- The five-year bond carries a 5.6% coupon, while the 10-year bond carries a 6.3% coupon.
- Investor demand reached 2.5 times the amount offered.
- The transaction created the third-largest senior corporate Kangaroo order book on record.
- SSE’s outstanding green bonds now total £5.9 billion.
- The bonds were swapped back to sterling at a 5.7% weighted average funding cost.
SSE Enters Australian Green Bond Market
SSE plc has expanded its global financing strategy by entering the Australian bond market for the first time, raising A$1bn (£520m) through green “Kangaroo” bonds.
Kangaroo bonds are Australian-dollar bonds issued in Australian markets by overseas companies. The transaction provides SSE with access to Australian investors while diversifying the company’s sources of long-term funding.
The issuance was structured in two tranches, comprising a five-year bond and a 10-year bond.
The first tranche raised A$600m through a green bond maturing on 20 August 2031, carrying a fixed coupon of 5.6%.
The second tranche raised A$400m through a green bond maturing on 20 August 2036, with a fixed coupon of 6.3%.
Both tranches were subsequently swapped back into sterling, giving SSE a weighted average funding cost of 5.7% for approximately £520 million of bonds with an average life of seven years.
Strong Investor Demand
The Australian issuance attracted strong demand from investors, with the transaction 2.5 times oversubscribed.
The strong order book made the deal the third-largest senior corporate Kangaroo order book of all time, highlighting the level of investor interest in SSE’s debut Australian-dollar issuance.
The strong demand also gives SSE another avenue for accessing international capital markets as the company continues to finance its wider investment and energy transition activities.
Entering the Australian market allows SSE to broaden its investor base beyond its established funding markets in the UK and Europe.
SSE Expands Green Financing
The transaction represents SSE’s 12th green bond issue since 2017 and reinforces its position as a major UK corporate issuer of green bonds.
Following the latest transaction, the total outstanding green bonds issued by SSE and its subsidiaries has reached £5.9 bn.
Green bonds provide SSE with a financing mechanism linked to eligible sustainable investments, while allowing investors to participate in the company’s wider green financing strategy.
The Australian issuance therefore adds another market to SSE’s established green bond programme.
Diversifying Sources of Capital
The debut in the Australian bond market forms part of SSE’s broader strategy to diversify its funding sources and secure long-term capital.
During FY27, SSE has now raised £1.1 bn of hybrid bonds, at an average cost of 4.6% and an average life of 6.6 years.
The company has also raised £1.9bn of new senior debt, with an average cost of 5.3% and an average tenor of 8.2 years.
The latest Australian transaction adds another sizable source of international capital to this funding mix.
Access to different debt markets can help companies reduce dependence on any single investor base or geographic market. For SSE, the Australian issuance demonstrates its ability to tap international investors while securing funding over relatively long maturities.
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Balancing Funding Costs and Market Access
While investor demand was strong, the transaction also highlights the cost of accessing long-term capital.
After the currency swaps, the bonds carry a 5.7% weighted average funding cost, which is above SSE’s recent average costs for both hybrid and senior debt.
However, the higher cost is accompanied by greater diversification of SSE’s funding sources and access to a new investor pool.
The successful order book suggests that investors remain willing to provide long-term capital to established energy companies with substantial green financing programmes.
Supporting SSE’s Green Financing Strategy
The latest transaction further expands SSE’s green financing activities, which have grown significantly since the company issued its first green bond in 2017.
With £5.9 billion of green bonds now outstanding, green financing has become an important component of SSE’s overall capital structure.
The Australian issuance also demonstrates how international bond markets can provide additional financing opportunities for companies investing in energy infrastructure and the broader transition toward a lower-carbon energy system.
By entering the Australian market, SSE can broaden its investor relationships while maintaining its focus on green financing.
Outlook
SSE’s A$1 billion debut Australian green bond marks an important step in the company’s global financing strategy. The strong 2.5-times oversubscription demonstrates significant investor demand and gives SSE access to a new pool of international capital.
Although the 5.7% weighted average funding cost is higher than the company’s recent average costs for hybrid and senior debt, the transaction strengthens funding diversification and extends SSE’s access to long-term financing.
With £5.9 billion in outstanding green bonds, SSE is continuing to build green financing into its broader capital strategy. The successful Australian debut could also provide a foundation for future access to the Kangaroo bond market as the company continues financing its energy and infrastructure investments.
FAQs
1. How much did SSE raise through its Australian green bond?
SSE raised A$1 billion (£520 million) through its first Australian green “Kangaroo” bond issuance.
2. What are the terms of SSE’s green bonds?
The issuance consists of a A$600 million five-year bond with a 5.6% coupon and a A$400 million 10-year bond with a 6.3% coupon.
3. How strong was investor demand?
The transaction was 2.5 times oversubscribed, producing the third-largest senior corporate Kangaroo order book on record.
4. How much green debt does SSE now have outstanding?
The latest issuance brings SSE’s total outstanding green bonds issued by the company and its subsidiaries to £5.9 billion.
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