Sabesp, Copasa Fall in Brazil as Weaker Real Boosts Debt

Brazil’s biggest water companies, Sabesp (SBSP3) and Copasa (CSMG3), were two of the three leading losers in an index of 12 local utilities on concerns that a weakening real will make it more expensive to service foreign debt.

Sabesp slid 3.4 percent to 22.95 reais in Sao Paulo, the lowest close since Oct. 15. Copasa, based in Belo Horizonte, declined to 36 reais after retreating as much as 3.1 percent on the BM&F Bovespa Small Cap index.

“These companies in the past years raised money abroad so now investors are concerned that foreign debt in real terms is going to increase as the Brazilian real weakens,” Henrique Kleine, head analyst at the Sao Paulo-based brokerage firm Magliano SA, said in a phone interview.

The Brazilian real weakened as much as 0.4 percent to 2.3623 per dollar, down 5.8 percent this quarter, according to data compiled by Bloomberg.

Sabesp is officially known as Cia. de Saneamento Basico do Estado de Sao Paulo and Copasa as Cia. de Saneamento de Minas Gerais.

To contact the reporters on this story: Stephan Nielsen in Sao Paulo at snielsen8@bloomberg.net; Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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