OGX Petroleo e Gas Participacoes SA, billionaire Eike Batista’s oil unit, had the biggest three-day decline in almost nine months after UBS AG and Credit Suisse Group AG cut their recommendations on the stock to sell.
OGX, based in Rio de Janeiro, dropped 1.5 percent to 2.61 reais at the close in Sao Paulo, extending its three-day fall to 23 percent, the most since June 29. The stock was the most traded by volume on Brazil’s Bovespa Index.
Yields on OGX’s $2.56 billion of bonds due in 2018 surged 0.58 percentage point to a record 12.46 percent.
The geological risks at OGX’s first developed field seem higher than anticipated given its current production rates, Lilyanna Yang and Luiz Pinho, Sao Paulo-based analysts for UBS, said in a note to clients yesterday while cutting their recommendation to sell from neutral.
Output at a third well connected by the company at its Tubarao Azul field has been “way below expectations,” Credit Suisse analysts led by Emerson Leite said.