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UNITED COMPANY RUSAL, INTERNATIONAL PUBLIC JOINT-STOCK COMPANY

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Rusal removed from share, debt indexes; Moscow mulls response

04/11/2018 | 01:21pm EDT

LONDON (Reuters) - International financial groups took action on Wednesday to distance themselves from the shares, bonds and metal of Russian aluminium giant Rusal (>> United Company Rusal Plc) after the United States imposed sanctions on the company.

LONDON (Reuters) - International financial groups took action on Wednesday to distance themselves from the shares, bonds and metal of Russian aluminium giant Rusal (>> United Company Rusal Plc) 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.

This included Oleg Deripaska and his Hong Kong-listed company Rusal and his newly created holding company En+ Group

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 <ENPLDR.MM> 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.

The new sanctions were an attempt to capture global markets for U.S. companies, Prime Minister Dmitry Medvedev told Russia's lower house of parliament.

"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."

Russia imported $12.5 billion worth of U.S. products in 2017, according to official Russian customs data. That included aircraft, machinery, pharmaceutical and chemical products.

DEBT, METAL EXCLUDED

On the debt front, Tradeweb, one of the world's largest bond platforms which is majority owned by Thomson Reuters Corp, said on Wednesday it no longer carried Rusal debt prices.

"The bonds have been removed from the platform," a Tradeweb spokeswoman said.

Rusal will be excluded on April 30 from JPMorgan's CEMBI index group of emerging market corporate bonds, the U.S. bank 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.

Moody's said it was withdrawing all ratings for Rusal due to its own business reasons.

"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.

Trader Glencore, which markets Rusal metal, is planning to declare force majeure on some aluminium supply, a source close to the matter told Reuters. [L8N1RO5U2]

Aluminium prices extended their rally on Wednesday to a sixth straight session, hitting an 11-week peak, amid persistent worry about shortages.

Analysts at CRU say Rusal accounts for 14 percent of aluminium supplies outside top producer China. Global output this year is estimated at 65 million tonnes.

"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.

The sanctions have had knock-on impact on precious metal palladium, which has surged 6 percent this week on the back of concerns about supply from number one producer Russia.

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.

Deripaska's Rusal owns a 28 percent stake in Norilsk Nickel (>> GMK Noril'skiy nikel' PAO), the world's biggest palladium producer.

(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)

By Eric Onstad


© Reuters 2018
Stocks mentioned in the article
ChangeLast1st jan.
CME GROUP INC. -0.02% 188.65 Delayed Quote.3.63%
EN+ GROUP INTERNATIONAL 3.70% 11.2 Delayed Quote.7.69%
GLENCORE PLC -2.67% 324.1 Delayed Quote.40.43%
JUST GROUP PLC 0.11% 92.25 Delayed Quote.31.97%
MEMBERS CO., LTD. 3.63% 3430 End-of-day quote.47.91%
MINING AND METALLURGICAL COMPANY NORILSK NICKEL -0.93% 31.81 Delayed Quote.1.96%
NEXT PLC 1.22% 8100 Delayed Quote.14.62%
PALLADIUM 0.00% 2013 Delayed Quote.-17.83%
PUBLIC JOINT STOCK COMPANY MINING AND METALLURGICAL COMPANY NORILSK NICKEL 0.00% 23400 End-of-day quote.-1.25%
SULZER LTD -2.13% 133.3 Delayed Quote.43.18%
SWISS RE LTD -1.75% 80.62 Delayed Quote.-3.26%
THOMSON REUTERS CORPORATION -0.25% 149.32 Delayed Quote.43.33%
UNITED COMPANY RUSAL, INTERNATIONAL PUBLIC JOINT-STOCK COMPANY 0.39% 7.63 End-of-day quote.111.36%
WILL GROUP, INC. 0.08% 1323 End-of-day quote.31.51%
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Financials (USD)
Sales 2021 11 647 M - -
Net income 2021 3 709 M - -
Net Debt 2021 3 460 M - -
P/E ratio 2021 3,87x
Yield 2021 0,57%
Capitalization 14 897 M 14 897 M -
EV / Sales 2021 1,58x
EV / Sales 2022 1,27x
Nbr of Employees 56 939
Free-Float 17,5%
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United Company RUSAL, International Public Joint-Stock Company Technical Analysis Chart | 486 | RU000A1025V3 | MarketScreener
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Number of Analysts 13
Last Close Price 0,98 $
Average target price 1,01 $
Spread / Average Target 3,50%
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Managers and Directors
Evgeny Viktorovich Nikitin Chief Executive Officer & Executive Director
Alexander Popov Chief Financial Officer
Bernard Zonneveld Chairman
Victor Mann Technical Director
Randolph N. Reynolds Independent Non-Executive Director