Holders of UniCredit Bond Tied to Russia’s Rusal Lose It All (2)

Holders of a UniCredit SpA structured note that’s tied to a slice of debt issued for Russia’s biggest aluminum producer won’t be getting their money back.

UniCredit received 22.25% of the bond’s face value in an auction held to raise funds to pay back creditors ahead of schedule. But the cost of unwinding hedges wiped out any returns for investors, leaving the recovery value at “zero,” UniCredit said in a filing on Thursday.

The 1 billion ruble ($12 million) note is pegged to the debt of United Co. Rusal International PJSC. Though the Russian company remains free of direct international ...