Will Rusal default on some liabilities due to new sanctions?

Will Rusal default on some liabilities due to new sanctions

Russian aluminum giant Rusal saw its share price almost halved on the Hong Kong stock exchange Monday after Washington placed it under sanctions, putting the metals major at risk of defaulting on part of its debt.

The US imposed sanctions on Friday on the world's second-biggest aluminium producer, plus other companies, officials and oligarchs in response to what it described as "malign activity around the globe".

The Kremlin slammed the sanctions.

EN+, the aluminium to hydropower firm controlled by Mr Deripaska, dived by 25% in London.

"This is an outrageous business from the point of view of illegality, from the point of view of flouting all the norms, and of course careful analysis is needed here", Putin's spokesman Dmitry Peskov told journalists.

The US actions target Russian oligarchs whose companies have wide-ranging involvement in worldwide capital markets. Other magnates hit by sanctions include the director of state-owned energy giant Gazprom, Alexei Miller. The main shareholder is Oleg Deripaska, who contributed to the new "black list" of the U.S. Treasury. The state-controlled bank is seen as a barometer for the wider Russian economy.

En+ Group and Rusal both released statements on Monday that said "it is highly likely" that the sanctions would "be materially adverse" to their businesses.

Mr Deripaska may also be forced to sell his stake in Norilsk Nickel, losing a drawn-out battle with Vladimir Potanin for control of the metals giant, they added. "Rusal sells around 250,000 tons to 300,000 tons to the USA, but what if Japan or South Korea also say no?"

In a sea of red for Russian stocks Evraz, the FTSE 100 mining group part-owned by Roman Abramovich, fell 14 per cent and Polymetal, the FTSE 250 miner, closed down 18 per cent.

"This is due to sanctions imposed by the United States on Russian oligarchs and their companies on Friday", it added.

Shares with Russian exposure listed elsewhere were also hit. It said further evaluations were being carried out to assess the impact of the sanctions.

Russian Federation has described the move as "absurd" and said it would not go unanswered.

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