Oct. 17 (Bloomberg) -- Russia's worsening financial crisis drove the cost of protecting against a default by OAO Gazprom to more than 1,000 basis points, the level for borrowers that investors term ``distressed.''

Credit-default swaps on Gazprom, the state-controlled monopoly for natural gas exports, climbed 79 basis points to a record 1,011, according to CMA Datavision.

Russia's main Micex Index of shares has lost more than 68 percent this year. Finance Minister Alexei Kudrin said he sees further declines because of the risks from the global credit crisis, Interfax reported. The government will invest 175 billion rubles ($6.7 billion) in highly rated Russian securities next week, Kudrin told reporters in Moscow today.

The cost to protect the bonds of OAO Sberbank, Russia's biggest lender, jumped 104 basis points to 980, and No. 2 lender VTB Group increased 242 basis points to 1,417.

Credit-default swaps protect bondholders against default by paying the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements. A basis point, or 0.01 percentage point, is equivalent to $1,000 on a contract that protects $10 million of debt from default.

Contracts on Russian government debt rose 125 basis points to 738 basis points.

Gazprom may withdraw from a deal to buy a 63 percent holding in the Kovykta gas field in east Siberia from TNK-BP, saying that the stake is likely to be worthless, the Financial Times reported.

The yield on Gazprom's $1.25 billion of bonds due in 2037 rose 38 basis points to 13 percent, according to Bloomberg prices at 7 p.m. in Moscow.

To contact the reporter on this story: Laura Cochrane in London at lcochrane3@bloomberg.net

Last Updated: October 17, 2008 11:25 EDT