(Bloomberg) — Russian assets nosedived as military attacks across Ukraine prompted emergency central bank action and investors braced for the toughest round of Western sanctions yet, wiping out almost $200 billion in stock-market value.
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The ruble sank to a record low, the cost of insuring Russian debt against default soared to the highest since 2009, and stocks ended the main trading session down 33% — their biggest-ever retreat. The Bank of Russia said it will intervene in the foreign exchange market for the first time in years and take measures to tame volatility.
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Vladimir Putin’s operation to “demilitarize” Russia’s neighbor shook global markets and spurred a flight to safety as Ukrainian and Russian assets took the main blow. The slump in Russian stocks was the third-worst in the history of markets, while Ukrainian default swaps signaled a 90% chance of default.
“The ball is now on the West’s side, we have to see how far sanctions go — whether Russia will be kept in the global financial system,” said Viktor Szabo, an investor at Aberdeen Asset Management Plc. in London.
The Russian central bank made no mention of raising interest rates, but said it will provide additional liquidity to banks by offering 1 trillion rubles ($11.8 billion) in an overnight repo auction. Policy makers have increased the benchmark rate by 525 basis points in the past 12 months to tame inflation.
Shares of Sberbank PJSC, Russia’s biggest lender, were down 42%, while natural-gas giant Gazprom PJSC traded 35% weaker.
East Europe Declines
Russia’s sovereign bonds plummeted, taking some to distressed levels, and the nation’s credit-default swap premium soared above 750. Ukraine’s 2033 dollar debt dived, lifting the yield to 88%, while the local currency market was suspended and limits were imposed on daily cash withdrawals. Stocks in Warsaw tumbled the most in almost two years.
The yield on 10-year ruble bonds was up 129 basis points at 12.16%. In penalties announced…