Morning Commentary: Vivo Energy cancels offering amid ‘adverse’ market; EM debt ‘painful, heavy’

By Rebecca Melvin

New York, June 13 – Vivo Energy plc said on Wednesday that it has decided not to proceed with a planned issue of notes at this time due to adverse market conditions, and the overall emerging markets debt market remained under pressure.

Africa-focused Vivo, a Shell licensee operating 1,800 service stations in 15 countries, said the deal was cancelled despite “strong interest” in the proposed $400 million of senior notes due 2023 or 2025, to be issued by subsidiary Vivo Energy Investments BV.

The company planned to use proceeds to repay debt and finance the cash portion of its proposed acquisition of Engen International Holdings (Mauritius) Ltd.

The Vivo cancellation didn’t really matter to the EM debt market, a London-based trader said, characterizing the Wednesday session as “illiquid, painful and heavy.”

Also on Wednesday, the broader markets were awaiting the conclusion of the U.S. Federal Reserve’s two-day policy meeting. It is widely expected that the Fed will boost its short-term interest rate another 0.25% Wednesday afternoon given the strength of recent U.S. economic data. The market is also waiting for the so-called dot plot and policy statement.

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