The Ibovespa fell from a one-week high as Eike Batista’s OGX Petroleo e Gas Participacoes SA sank after ending talks with bondholders without an agreement, outweighing gains by lender Itau Unibanco Holding SA.
Plane builder Embraer SA dropped after JetBlue Airways Corp. said it will defer purchases of 24 aircraft. Itau rose to the highest level since March 2012 after posting a third-quarter profit that exceeded analysts’ estimates.
The Ibovespa sank 1 percent to 54,538.80 at the close of trading in Sao Paulo, with 44 stocks lower and 25 higher. OGX tumbled 21 percent to 23 centavos, contributing the most to the benchmark’s decline. The real fell 0.2 percent to 2.1825 per dollar at 5:24 p.m. local time.
“There are more and more signs that OGX is going broke,” Fernando Goes, an analyst at Sao Paulo-based brokerage Clear Corretora, said in a phone interview. “Until OGX is cut out of the index, it will continue to stop the Ibovespa from reflecting what’s really happening in the market.”
OGX missed a $45 million debt payment on Oct. 1, prompting Standard & Poor’s to assign a default rating to $1 billion of bonds. Moody’s Investors Service and Fitch Ratings gave OGX a 30-day grace period before calling a default. The grace period expires Oct. 31. The oil company said in a statement today that it had negotiated for months with holders of securities due in 2018 and 2022 and no accord was reached.
OGX’s shares have plunged 95 percent this year, making the company the second-smallest in market value among the Ibovespa’s members. The stock is still the sixth-heaviest weighted on the gauge, which ranks its members according to trading volume. Today’s 6-centavo loss was responsible for 80 percent of the index’s decline.
Itau added 3.7 percent to 34.61 reais, the second-best performer on the Ibovespa. The Sao Paulo-based lender said in a statement today that recurring net income, which excludes one-time items, was 4.02 billion reais in the third quarter. That compares with an average estimate of 3.9 billion reais among nine analysts surveyed by Bloomberg.
Embraer lost 6.5 percent to 16.65 reais. The company will deliver 24 E190 jets to JetBlue from 2020 to 2022 instead of 2014 to 2018, according to a statement from the New-York based airline.
The Ibovespa entered a bull market Sept. 9 after rising 20 percent from this year’s low on July 3 through that day. The gauge is still down 16 percent in dollar terms this year, compared with a decline of 1.8 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.
Trading volume of stocks in Sao Paulo was 6.12 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.61 billion reais this year through Oct. 22, according to data from the exchange.