• Lender Caixa Federal also gave up on insurance unit IPO plan
  • Ibovespa has fallen 16% since May peak on budget uncertainties

IRB Brasil Resseguros SA, the largest reinsurer in Brazil, postponed a plan to sell shares in an initial public offering because of market turmoil, according to a person familiar with the deal who asked not to be identified because the information is private.

The company, which planned to raise 1.5 billion reais ($395 million), becomes the second state-controlled entity to cancel an IPO this month, after Caixa Economica Federal delayed the 10 billion real IPO of its insurance unit Oct. 1. It’s a blow to the government, which was relying on the sales to boost the nation’s coffers amid a widening budget deficit that prompted Standard & Poor’s to cut its credit rating to junk last month.

IRB’s press office declined to comment. The government hasn’t made any decision about the IPO yet, Finance Minister Joaquim Levy told reporters in Brasilia on Wednesday.

Brazil’s benchmark Ibovespa equity index has fallen 16 percent since this year’s peak in May as the economy heads toward its longest recession since the 1930s and President Dilma Rousseff struggles to win approval for austerity measures designed to avoid another credit-rating downgrade. Brazil has had only one IPO this year, and two in all of 2014. That compares with five in Mexico this year and five last year.

Reuters reported IRB’s decision to delay its IPO earlier.

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