Russia’s stock market to close for a 3rd week, while the clock ticks down to a key debt payment deadline

• Russia’s stock market will remain closed for a third straight week, the central bank said over the weekend.
• The MOEX, which tumbled 33% the day Russia invaded Ukraine, is going through its longest-ever trading halt.
• Russia is due to pay $117 million on two dollar-denominated bonds Wednesday, but is widely expected to default.

Russia’s stock market is set to be closed for another week in an effort to keep equity prices from tumbling as the pressure from international sanctions intensifies, just as Moscow faces a debt deadline.

The central bank announced Saturday that trading on the MOEX stock market will remain closed from March 14 to 18, with some exceptions.

Trading sessions in the foreign exchange market, the money market, and the repo market of the exchange will open at 10 a.m. Moscow time on those dates, the bank said. Its trading schedule for the week beginning March 25 will be announced closer to the time. However, outside the Russian market, trading in the ruble, as well as existing sovereign and corporate debt has all but ground to a halt, as has trading in Russian companies on overseas stock markets.

After Russia’s invasion of Ukraine, the US and its allies imposed a line of sanctions that have hurt the ruble and led to a collapse in several Russian equities. The economy is now facing its worst economic crisis since the 1991 fall of the Soviet Union.

The MOEX crashed by 33% on February 24, the day Russia launched its invasion of Ukraine. To stem any further impact, Moscow’s central bank suspended the stock exchange from February 28 in the country’s longest-ever trading halt.

Currency trading reopened last week, after which the ruble tumbled 11% to 117.7 per dollar, near record lows. 

Russia faces another big hurdle this week. The government is due to pay $117 million on two of its dollar-denominated bonds Wednesday, according to Reuters.

But the finance ministry has said its sovereign bond payments depend on Western sanctions, and if it does pay — it’ll do so in rubles. 

This raises the technical possibility of a debt default, a likelihood that seems more certain after Fitch last week downgraded Russia’s credit rating and said a sovereign default is “imminent.“

Moody’s and S&P Global too have cut their rating outlook for Russia, meaning that all three top rating agencies see the country’s credit as junk.

IMF managing director Kristalina Georgieva also suggested Sunday that a Russian sovereign default is now probable. “Russia has the money to service its debt, but cannot access it,” she said.

This is because Russia is barred from using its foreign currency reserves. On Sunday, the Russian finance minister admitted nearly half the country’s $640 billion foreign exchange reserves are unusable due to sanctions imposed by the US, Europe, and other Western nations.

Russia’s central bank is due to meet Friday, after already more than doubling interest rates to 20% earlier this month.

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