Russia

As Russia's military secured the Crimean peninsula, its currency hit a record low and its stock market plunged in the face of U.S. and European warnings of sanctions over the incursion into Ukraine, The Wall Street Journal reported. The Obama administration took the first steps late Monday, suspending military cooperation with Russia as well as talks aimed at boosting trade and investment, in a bid to isolate Moscow. President Barack Obama said Russia is "on the wrong side of history" as well as international law.

OAO Gazprom’s threat to end natural gas discounts for Ukraine adds to the financial burden on the near-bankrupt government in Kiev and makes Europe’s energy supply part of the escalating crisis, Bloomberg News reported. Russia’s gas-export monopoly said on March 1 it may end last year’s agreement to supply Ukraine at a cheaper rate unless it’s paid $1.55 billion owed for fuel. It’s the first time since the otherthrow of pro-Moscow president Viktor Yanukovych last month that Russia has directly used its position as Ukraine’s dominant energy supplier to pressure the new regime.

There is a small risk that Ukraine may default on $3 billion in Eurobonds that Russia recently acquired, Russia's Deputy Finance Minister Sergei Storchak said on Tuesday. "We probably have risks, but not so big ones," he said. "It's possible to begin with the fact that the debtor has a difficult financial situation, that it can't return the money to us in two years." Storchak added that while the possibility existed of substituting one instrument for another, he was opposed to including Ukraine's debt to Russia in a general restructuring. "This wouldn't be right.

Russian state lender Sberbank is negotiating with loss-making aluminium group Rusal on a debt restructuring deal to help the company weather low aluminium prices, two banking sources told Reuters on Friday. United Company Rusal, the world's biggest producer of the metal used in transport and packaging, has been hit by weak aluminium prices and its heavy net debt levels of around $10 billion. "The model has been broadly agreed... We cannot afford the world's largest producer to fail," one of the sources said. Rusal declined to comment. Sberbank could not be reached for immediate comment.

Russia has made its first payment of $3 billion for Ukraine's newly issued eurobonds, as part of Moscow's bailout package for its struggling neighbor, Russian Prime Minister Dmitry Medvedev said Tuesday, Interfax reported yesterday. The payment was first announced by Russian Finance Minister Anton Siluanov on Monday. Ukraine's President Viktor Yanukovych last month unexpectedly refused to sign a landmark association agreement with the European Union that would have removed significant trade barriers.

If events go smoothly for Ukraine’s cash-strapped government, Russia will begin bailing out the country as early as this week with a first purchase of $3bn in Ukrainian bonds, the Financial Times reported. Relief on the energy front is also imminent because Moscow will cut Kiev’s natural gas bill by one-third from the start of the new year. Those are the chief benefits promised this week by Russia’s President Vladimir Putin in a deal that will keep Ukraine firmly rooted in Moscow’s orbit and that appears to mark another foreign policy triumph for the Kremlin over the west.

Ukrainian anti-government protesters demanded to know what President Viktor Yanukovych had ceded to seal $15 billion of Russian financial aid and a one-third discount on energy imports, Bloomberg reported. Russia will buy Ukrainian state debt this year and next and will cut the price it charges for natural gas to $268.5 per 1,000 cubic meters, President Vladimir Putin said after meeting Yanukovych in Moscow yesterday. The two leaders said they didn’t discuss a Russia-led customs union after speculation Ukraine was close to joining riled pro-European demonstrators in Kiev.

Russian billionaire Oleg Deripaska's Central European Aluminum Company (CEAC) is suing Montenegro for 100 million euros ($140 million) over the failure of its aluminum plant there, Reuters reported. A statement issued in Cyprus, where the Russian company has its headquarters, CEAC said the case will heard in Vienna. The statement said Montenegro violated a 2010 settlement agreement, leading to the plant going bankrupt. In a separate statement, Montenegro's government denied any wrongdoing.

Russia’s central bank has warned that Russia’s consumer lending sector threatens the country’s “financial stability”, the same day that it revoked the licence of Master Bank, a midsized retail lender, the Financial Times reported. Addressing the Russian Duma, central bank head Elvira Nabiullina reiterated the need for setting a maximum interest rate level for consumer loans due to growing concerns of a bubble in the sector.

Russian state-controlled bank VTB has agreed to join other creditors in restructuring mining group Mechel's $9.6 billion debt, a source close to VTB said on Saturday, Reuters reported. The coal-to-steel group, controlled by Igor Zyuzin, borrowed heavily to pay for acquisitions even after the 2008-2009 global economic slump, leaving it dangerously exposed to a global industrial downturn. VTB had been resisting a restructuring deal in which Mechel wanted a waiver of loan covenants and delays to its debt repayments, bankers familiar with the negotiations say.