By Eric Onstad
LONDON (Reuters) - International financial groups took action on Wednesday to distance themselves from the shares, bonds and metal of Russian aluminium giant Rusal after the United States imposed sanctions on the company.
In Moscow, the government pledged to provide Rusal with short-term liquidity and offer other assistance while it also considered hitting back by looking at U.S. goods or goods produced in Russia by U.S. companies.
Shares of United Company Rusal, one of the world's biggest aluminium producers, will be deleted from global equity and debt indexes while its metal will not be allowed on the London Metal Exchange (LME) and the CME Group.
The U.S. Treasury on April 6 announced sanctions against seven Russian oligarchs and 12 companies they own or control, saying they were profiting from a Russian state engaged in "malign activities" around the world.
The two companies will be deleted from FTSE Russell's equity indexes effective from the open on April 13, the index provider said in a statement.
Bloomberg users in Europe told Reuters that Bloomberg had stopped displaying share prices of Rusal, En+ Group and Swiss pumpmaker Sulzer, all of which are subject to the sanctions. Bloomberg declined to comment.
Rusal's shares in Hong Kong have slumped by half since the sanctions were imposed on Friday and gave up another 1.9 percent on Wednesday.
"Measures in response should be well thought-out," he said. "There are quite a lot of products ... in our markets that we get from the USA."
DEBT, METAL EXCLUDED
"The bonds have been removed from the platform," a Tradeweb spokeswoman said.
The exclusion will be done as part of the end-of-month rebalancing of the indexes, it added.
As of Friday, April 6, Rusal has a weight of 0.12 percent and 0.15 percent in the CEMBI Broad Diversified and CEMBI Diversified indexes respectively, JPM said in a statement seen by Reuters that was sent to clients late on Monday.
"At the time of withdrawal the ratings were: corporate family rating of Ba3 and probability of default rating of Ba3-PD At the time of withdrawal these ratings had a positive outlook," it said in a statement.
Rusal's aluminium brands are being excluded from the LME, the world's biggest market for industrial metals, and the U.S. Comex exchange owned by the CME.
The CME revoked approved status for Rusal's metal for delivery against CME aluminium futures contracts, effective from April 10, a notice on the CME website said.
The London Metal Exchange said late on Tuesday Rusal's aluminium would be suspended from its list of approved brands from April 17 after some members raised concerns about settling contracts with sanctions-hit companies.
Aluminium prices extended their rally on Wednesday to a sixth straight session, hitting an 11-week peak, amid persistent worry about shortages.
"There's a lot of panic and uncertainty. Buyers are scrambling to try to replace where they can, to plug the gap left by not having Russian-origin metal," said Robin Bhar, head of metals research at Societe Generale in London.
Although the supply pipeline of the metal, more than two-fifths of which is sourced in Russia, has not been directly hit by the sanctions, the market has been rattled by the inclusion of Deripaska on the blacklist.
(Additional reporting by Claire Milhench, Sujata Rao-Coverley, Jan Harvey and Pratima Desai in London; Polina Devitt, Polina Nikolskaya, Darya Korsunskaya and Vladimir Soldatkin in Moscow, Swati Verma in Bangalore and Melanie Burton in Melbourne; Editing by Richard Balmforth and David Evans)
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