OAO Mechel (MTLR), the second-most indebted Russian mining company, climbed the most on the benchmark stock gauge as investors bet a request for more state financial assistance will bolster its finances.
Mechel increased as much as 3.7 percent before trading up 3.1 percent at 166.40 rubles by 10:22 a.m. in Moscow. The amount of shares traded was 512,188, equivalent to about 68 percent of the three-month average. The Micex tumbled 1.9 percent to 1,466.42.
Mechel is seeking financing for its Elga coal field from state development bank Vnesheconombank, VEB spokeswoman Ekaterina Grishkovets said March 15. The company, fined in 2008 by the government for price violations, won an extension on loans from state lender VTB Group last year, while OAO Gazprombank, a unit of the gas export monopoly, increased the duration of its credit lines.
“Given the political support for large-scale projects in Russia’s Far East, we think Mechel certainly has a chance of receiving funding for Elga from VEB, but the potential terms and amount of the loan remain unclear at this stage,” Sberbank CIB analysts said in an e-mailed note today. “Should Mechel succeed in obtaining non-recourse funding, it would materially improve its medium-term cash flow profile and act as a positive event for the stock, in our view.”
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