The Luxembourg Stock Exchange is strengthening its role in sustainable finance with the listing of the first sustainability-linked bonds (SLBs) issued by the Senegalese state-owned electricity company Senelec. Worth 108 billion CFA francs, or approximately €164m, this issue has been listed on the LuxSE’s Official List and featured on the Luxembourg Green Exchange (LGX) platform since Monday 13 July.

According to LuxSE, this is the first securitisation carried out by a public utility in Africa. The bonds are backed by unpaid or overdue electricity bills and are intended to enable Senelec to diversify its sources of funding whilst gaining access to international capital markets in local currency.

The funding has two aspects. On the one hand, around 52.5% of the funds raised will be allocated to renewable energy and energy efficiency projects. On the other hand, the bond issue is linked to measurable performance targets, notably the reduction of losses on the electricity grid and the expansion of access to electricity. Senelec already supplies electricity to around 80% of the Senegalese population, and the country is aiming for renewable energy to account for 40% of its energy mix by 2030.

Supporting the energy transition in Africa

“We are delighted to welcome Senelec to LuxSE and LGX with its first sustainability-linked bonds,” said Julie Becker, CEO of the Luxembourg Stock Exchange. She believes this transaction illustrates how sustainable capital markets can support the energy transition in Africa by connecting ambitious issuers with international investors.

For Papa Toby Gaye, chief executive of Senelec, this initiative represents “a major innovation”. He believes it will enable the company to diversify its sources of funding on a sustainable basis, improve the management of its receivables and strengthen its ability to raise medium- and long-term finance in order to accelerate the transformation of Senegal’s energy sector.

This dual listing also forms part of the partnership established in 2022 between the Luxembourg Stock Exchange and the Regional Stock Exchange (BRVM), which covers the eight countries of the West African Economic and Monetary Union. The two financial centres aim to promote dual listings, develop sustainable finance in West Africa and strengthen links between regional and international markets.