Fitch places Vivo Energy on watch

Fitch Ratings said it placed Vivo Energy Ltd.'s BBB- long-term issuer default rating and the BBB- rating on the $350 million of senior unsecured notes issued by its subsidiary Vivo Energy Investments BV on rating watch negative (RWN).

“The RWN reflects the potential impact on Vivo Energy's credit profile from the announced material acquisition of African peer Engen Ltd. (74%). If the transaction is mainly debt-funded it could lead to a downgrade. The acquisition, which remains subject to regulatory approvals, would slightly improve Vivo Energy's business profile as it would increase the scale and widen geographic diversification of the business. Fitch will consider the economics of the transaction and financing structure to assess the impact on the financial profile of the combined group, once there is more information,” the agency said in a statement.

The deal is subject to regulatory approvals and Fitch noted asset sales may be required in the markets where the companies overlap.

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