(MENAFN- AFP) Russia's central bank probed on Thursday a flurry of unusual trades that saw shares in one of the country's largest miners halve in minutes on no apparently significant public news.
The stock price of Mechel plunged on Wednesday by 47.2 percent to 50.7 rubles ($1.55, 1.15 euros) on the Moscow Exchange before making a slight recovery.
The metals and coal conglomerate closed 12 percent higher on Thursday at around 63.5 rubles per share.
The central bank's financial markets regulator said it was paying "close attention" and examining "the actions of several traders" who sold shares of Mechel in a 30-minute span starting at 5:00 pm (1300 GMT).
Mechel has long been facing headwinds because of $9.4 billion (7.0 billion euros) in debts it incurred during an acquisition drive directly preceding the 2008-2009 global financial crisis.
The market has been well aware that the international miner had spent recent weeks in debt restructuring negotiations. Its susceptibility to commodity price weakness has also been an open secret to traders.
Spokesman Arseny Palagin said that Mechel's talks with creditors were proceeding smoothly and called the stock decline "speculative in nature".
But the central bank on Thursday still decided to adjust the value of Mechel's bonds "to a coefficient of zero" -- effectively ruling them out of any future refinancing deal.
Many in the financial media pointed to the irony of Mechel shares suffering another precipitous drop.
Vladimir Putin in July 2008 managed to shave $6 billion off the company's market value by noting the absence of Mechel chief executive Igor Zyuzin at an industry conference.
Putin accused Mechel of exporting raw materials at half the price at which it sold them on the domestic market and demanded to know why Zyuzin was not present at the meeting to explain himself.
Zyuzin "suddenly got sick," Putin then told the meeting.
He "should get better as quickly as possible," Putin continued. "Otherwise we will have to send him a doctor."
Investment banks and traders said there was no such obvious explanation for Mechel's stock implosion this time around.
Credit Suisse told its clients there were "unsubstantiated reports" of Mechel having problems reaching an agreement with creditors about debts coming due next year.
But the Swiss bank noted that those rumours have been denied by one of Mechel's largest creditors and that it believed "other creditors may also confirm that negotiations are also going as planned."
Sberbank chief German Gref also confirmed that Russia's top lender had already successfully restructured some of Mechel's obligations.
"Even I do not understand why this happened," Russian media quoted Gref as saying.
'Who sold the shares is unclear'
Moscow's Zerich brokerage firm analyst Oleg Dushin suggested that Mechel's problems may have been sparked by the inconclusive outcome of a Chinese Communist Party plenum dedicated to market reforms.
"People are afraid of a drop in Mechel exports to China," said Dushin. "And it seems that a chain reaction followed."
But the leading Vedomosti business daily quoted a source close to Mechel as saying that the company's stock was sold off "in a few large blocks".
"Who sold the shares is unclear," Vedomosti wrote. "Perhaps one of the (investment) funds decided to dump its stock."
The pace of Mechel's market meltdown prompted some banks to caution clients about the dangers of dealing with troubled companies that issue stocks and bonds on the relatively low-volume Moscow Exchange.
The Russian edition of Forbes magazine noted that it was "not difficult" for large players to manipulate the price of Mechel because its daily volume rarely exceeded $1.8 million.
Mechel's market capitalisation now stands at $860 million -- a tiny fraction of the $24 billion the company's shares were worth a few months before Putin mentioned Zyuzin's absence at the business meeting.
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