Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Stocks Stay Firm As T-Bills Take Dive

Russia's Finance Ministry defended its auction of 126-day treasury bills Wednesday and blamed "rogue bids" for forcing yields 9 percentage points below market.

"We are much more upset about this situation than the market -- we are very upset -- and we hope tomorrow to solve this problem," Bella Zlatkis, head of the ministry's department for securities and the financial markets, said.

The turmoil in Russia's fixed-income market was in direct contrast with the equity market, which saw prices stay virtually unchanged as investor concerns about who would be appointed to Russia's new Cabinet put a damper on trading.

The Moscow Times Index of 50 leading shares lost 0.29 percent to close at 341.89 on low $68.12 million reported turnover. The index closed at 344.75 on Tuesday.

"The longer this silence continues about specific names and the policy in general, the more those investors who have made good money over the past month are trying to take profits," Zlatkis said.

Unified Energy Systems share price firmed slightly to $0.3292 from $0.3275, but LUKoil nosed down to $18.00 from $18.15. International long-distance communications provider Rostelekom fell to $3.375 from $3.395.

Of the T-bill fracas, Zlatkis said the ministry had not acted in concert with its primary ally, savings bank Sberbank, to force the market to accept yields of 15.25 percent on a new 3 billion ruble ($493.4 million) issue. A similar four-month T-bill issue yielded 24.42 percent in secondary trade Tuesday.

Zlatkis sought to reassure market participants who were surprised and dismayed at the low yield, which some said could affect the reputation of the Central Bank and the Finance Ministry.

"Sberbank did not invest a single kopek in this auction and did not do anything," Zlatkis said.

She said the ministry had followed auction rules, which require it to accept all bids made at an unfixed price, known as noncompetitive bids, and that in this case the price had to be based on the highest fixed price bid.

"We are not at all satisfied with this yield. We received what was offered by the traders, who are absolutely incapable of analyzing the situation on the market," she said. "I think that in secondary trade tomorrow all will be worked out and those who had large losses today -- it will be possible for them to be compensated."