Russian firms on brink as U.S. sanctions cause panic

Russian firms on brink as U.S. sanctions cause panic

Russian firms on brink as U.S. sanctions cause panic

Rusal shares sank on Friday in Moscow trading, then collapsed on Monday, losing about half their value.

In a filing to the Hong Kong stock exchange today, Rusal said it is "highly likely" the sanctions will have a material adverse impact to the company and its prospects, and that this "may result in technical defaults in relation to certain credit obligations of the group".

The entrance to a Moscow business centre that houses the offices of the aluminium giant Rusal, one of the companies controlled by the Russian billionaire Oleg Deripaska.

The sanctions - created to make it nearly impossible for Mr Deripaska's empire to do business in greenback - pose a grave threat to an oligarch who has been seen as one of Russian President Vladimir Putin's closest allies.

The Russian government was "doing everything possible to minimise negative consequences" of the U.S. measures, he added.

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Other Russian oligarchs hit by sanctions include Alexei Miller, CEO of Russia's state-owned energy giant Gazprom, the BBC said. "The situation is pretty egregious from the point of view of legality, it tramples on all kinds of norms, and so a thorough analysis is necessary", he said.

Russia's prime minister, Dmitry Medvedev, told his government to draw up possible retaliatory steps.

"Market concerns have that the sanction against Rusal and its own technical default assessment may lead to supply shortage in both aluminium and alumina", said Hong Kong broker Argonaut in a report.

The latest wave of sanctions also saw Russian stock market indices plummet around 10 percent.

The benchmark Moex index was down 7% on Monday, while the RTS index, which trades in dollars, dropped as much as 9%.

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Russia's currency also took a hit, with the dollar and euro rising to 59.81 and 73.42 against the rouble respectively.

The London Metal Exchange aluminium spot price went from $1,967 per tonne on Friday morning to close at $2,155/t yesterday.

At around 0710 GMT, the company's stocks had tumbled 49 percent to HK$2.38 ($0.30, 0.25 euros).

In total, 12 companies had sanctions imposed for profiting from a Russian state engaged in "malign activities".

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