Russia’s rating cut to junk; talks on tap: Ukraine update

Russian forces appear to be stalled outside of Kyiv, possibly due to food and fuel shortages, a Pentagon official said.
Image: Bloomberg

Russia’s invasion of Ukraine was denounced by the United Nations General Assembly, underscoring Moscow’s increasing isolation on the global stage, as US authorities weighed restrictions on Russian imports.

Russian forces appear to be stalled outside of Kyiv, possibly due to food and fuel shortages, a Pentagon official said, adding defense authorities expect Moscow to learn from early mistakes and regroup. The official said Russian forces appear to be preparing to assault the port city of Mariupol from all sides.

Ukraine said it would take part in a second round of talks with Moscow set for Thursday. Russia’s Defense Ministry issued its first casualty tally, saying 498 of its personnel had been killed. The US State Department accused the Kremlin of a media crackdown to hide from its people evidence from Russia’s invasion.

Russia’s rating was cut to junk by Moody’s. Fitch also slashed Russia’s credit rating six levels to junk and MSCI is eliminating Russian equities from its emerging-markets index. Russian markets continued to be roiled, with investors trying to find out whether the country’s bonds are in default.

Key Developments

  • Russian Firms Are Cut by US Lobbyists After Spending Millions
  • Understanding the Roots of Russia’s War in Ukraine: QuickTake
  • Russia Homes In on Odesa Amid Faster Advance in Ukraine’s South
  • Commodities Hit New Highs as Traders Shun Russian Purchases
  • Russian Markets Break Down With Cash Frozen at the Border
  • Roman Abramovich Says He’s Selling Chelsea Football Club
  • Fog of Cyberwar Grips Ukraine and Russia With Only Bad Outcomes

All times CET:

Japan Unveils New Sanctions for Russia, Adds Belarus (5:08 a.m.)

Japan’s government unveiled fresh sanctions on Russian officials and announced export controls and other limitations on Belarus for its involvement in the Ukraine conflict. Belarus President Alexander Lukashenko and other high-ranking government officials are to have their assets frozen by Japan, the government said.

US Says Russia Throttling Facebook, Twitter (4:29 a.m.)

Russia’s government is “throttling Twitter, Facebook, and Instagram platforms that tens of millions of Russia’s citizens rely on to access independent information and opinions and to connect with each other and the outside world,” US State Department spokesperson Ned Price said in a statement.

Price added that “these partial blockages further limit where and how Russian citizens can see and share evidence of the truth of Russia’s invasion of Ukraine.”

Stocks Rise; Brent Tops $116 (3:48 a.m.)

Stocks rose in the wake of reassuring comments on monetary-policy tightening from Federal Reserve Chair Jerome Powell, while crude oil extended gains sparked by Russia’s invasion of Ukraine.

Powell in testimony to US lawmakers backed a measured Fed interest-rate liftoff and vigilance on inflation, while indicating the world’s biggest economy can weather higher borrowing costs.

The sanctions imposed on Russia have caused traders to back away from its resources, stoking fears of shortfalls in energy, grains and metals. Brent crude scaled $116 a barrel, and a commodity index is at a record high.

Quad Leaders to Discuss Ukraine, FNN says (3:44 a.m.)

Japanese Prime Minister Fumio Kishida will speak to his Quad counterparts online Thursday in Tokyo to discuss the situation in Ukraine, broadcaster FNN reported, without attribution. The Quad consists of Australia, India, Japan and the US.

Bangladeshi Vessel Hit by Missile in Ukraine Port (3:18 a.m)

An unidentified missile struck a Bangladeshi vessel docked at the Ukrainian port of Olvia on the northern Black Sea, setting it a blaze and killing an engineer on board, the ship owner said. The vessel wasn’t carrying any cargo and had 29 crew on board.

“The missile set the vessel ablaze, but it was not clear which side fired the missile – Russian or Ukrainian,” said Pijush Dutta, executive director of Bangladesh Shipping Corp.

Russia Cut to Junk by Moody’s (1:42 a.m.)

Russia’s long-term foreign debt rating was downgraded by Moody’s to B3 from Baa3, with the rating company saying there may be further cuts.

“The scope and severity of the sanctions announced to date have gone beyond Moody’s initial expectations and will have material credit implications,” it said in a statement. “Severe and coordinated sanctions imposed on Russia together with its retaliatory response in recent days have materially impaired its ability to execute cross-border transactions, including for sovereign debt payments.”

Reddit Restricts Access to Russia State Media (1:39 a.m.)

Reddit said it would restrict access to Russian state media across its site. “While many communities on Reddit already prohibited links to Russian state media outlets like RT, Sputnik, and their foreign language affiliates, we have made such restrictions universal across the site in all geographies,” it said in a statement.

Russia Cut Six Levels to Junk by Fitch (11:59 p.m.)

Russia’s credit rating was cut six levels to junk by FitchRatings, which said the severity of international sanctions in response to the country’s invasion of Ukraine could undermine its capability and willingness to service debt.

Fitch lowered Russia to B from BBB and placed the rating on negative watch Wednesday, citing weakening external and public finances, slowing growth, elevated domestic and geopolitical risk and the potential for further sanctions.

Separately, MSCI Inc. is eliminating Russian equities from the firm’s widely-tracked emerging-markets index, cutting the stocks off from a large segment of the investment-fund industry as penalties mount over the invasion. “During the consultation, MSCI received feedback from a large number of global market participants, including asset owners, asset managers, broker dealers, and exchanges with an overwhelming majority confirming that the Russian equity market is currently uninvestable and that Russian securities should be removed from the MSCI Emerging Markets Indexes,” MSCI said in a statement.

Russians, Ukrainians Stranded in Dominican Republic (11:40 p.m.)

Tourism officials in the Dominican Republic are holding emergency meetings to determine how to handle some 17,000 Russian and Ukrainian travelers who have been stranded in the Caribbean nation amid flight cancellations and overflight bans. In a statement Wednesday, Tourism Minister David Collado said stranded travelers would be allowed to stay in their hotels until they can safely be repatriated.

US Says Missile Test Postponed to Avert Misunderstandings (10:04 p.m.)

The US will postpone a Minuteman-III intercontinental ballistic missile test planned for this week to show restraint after President Putin raised Russia’s nuclear alert level over the weekend, Pentagon spokesman John Kirby said. He called Putin’s move “unacceptable.”

Defense Secretary Lloyd Austin directed the postponement “in an effort to demonstrate that we have no intention in engaging in any actions that could be misunderstood or misconstrued,” Kirby said during a Pentagon press conference.

Blinken to Travel to Eastern Europe Allies (9:06 p.m.)

Secretary of State Antony Blinken will travel to Eastern Europe beginning Thursday as the US continues efforts to reassure Russia’s neighbors and NATO allies of its support, the State Department announced.

The trip will include stops in Belgium, where Blinken will participate in NATO and Group of Seven ministerial meetings, as well as Poland, Moldova, Latvia, Lithuania and Estonia. Poland is temporarily hosting the US Embassy to Ukraine and has seen large inflows of refugees in recent days.

Moldova, a non-EU state wedged between Romania and Ukraine, has also seen significant inflows of refugees. Russia maintains troops in a breakaway pro-Russian region of the country. While there, Blinken will affirm US support for “Moldova’s democracy, sovereignty, and territorial integrity,” State Department spokesman Ned Price said in a statement.

Key US Senators Propose Ban on Importing Russian Oil (8:55 p.m.)

Democratic Senator Joe Manchin and Republican Senator Lisa Murkowski have drafted a bill that would prohibit the importation of Russian crude oil, petroleum, petroleum products and liquefied natural gas.

The legislation, which isn’t yet finalized, is the latest effort on Capitol Hill to hit Russian oil exports. The two moderate senators come from energy-producing states — West Virginia and Alaska — and Manchin is the chairman of the Energy Committee, giving their bipartisan effort a decent shot of gaining traction in the evenly divided Senate.

Bank of Russia to Keep Stock Trading Closed Thursday (8:16 p.m.)

The Bank of Russia said it won’t resume stock trading on the Moscow Exchange Thursday, according to statement. It will separately announce the trading schedule for March 4.

US Seeks to Undercut Russian Primacy in Oil, Gas (8:01 p.m.)

The Biden administration says it is seeking to degrade Russia’s primacy as one of the world’s biggest producers of oil and natural gas.

The US and its allies “share a strong interest in degrading Russia’s status as a leading energy supplier,” the White House said in a fact sheet describing new export controls, including restrictions on the sale of oil technology.

It wasn’t immediately clear what oil technology would be hit by the latest wave of export controls — including equipment to coax oil and gas out of wells or refine it into diesel and gasoline. The White House said the controls would target “oil refining, a key revenue source” that supports the Russian military, but also described “export controls on oil and gas extraction equipment.”

EIB Offers Ukraine 2 Billion Euros in Aid (7:51 p.m.)

The European Investment Bank offered Ukraine 2 billion euros ($2.2 billion) of liquidity support in the form of credit lines and infrastructure commitments to help with investment and reconstruction needs.

“We will help rebuild whatever the Russian army knocks down,” the bank said in a statement on Wednesday.

US Sees Russian Forces Stalled Near Kyiv (7:05 p.m.)

A Pentagon official said Russian forces appear to be stalled outside of Kyiv, possibly due to food and fuel shortages, though defense officials expect Moscow to learn from early mistakes and regroup.

Little has changed on the battlefront over the past day, the official said, though Russian troops have made some modest progress in Ukraine’s south. Russia has so far fired about 450 missiles of various types since the conflict started, with some of that targeting media sites.

The official said Russian forces appear to be preparing to assault the port city of Mariupol from all sides, and that Moscow has still not achieved air dominance over Ukraine.

Ukrainian Delegation on Its Way for Talks with Russia (6:36 p.m.) 

Ukraine’s delegation has departed for talks with Russia to the Bialowieza Forest on the border between Poland and Belarus, President Volodymyr Zelenskiy’s press office said.

Russia Announces First Casualty Count From Invasion (6:16 p.m.)

The Russian Defense Ministry said 498 of its servicemen have been killed and 1,597 wounded in Ukraine, Interfax reported. It said no conscripts or cadets were taking part in fighting, a statement that contradicts eyewitness and social media posts purporting to show young Russian soldiers surrendering to Ukrainians.

The casualty numbers, a fraction of those posted by Ukraine’s Defense Ministry, were the first public accounting from Russia.

UN Slams Invasion, Showing Russia’s Increased Isolation (6:10 p.m.) 

The United Nations General Assembly on Wednesday approved a resolution denouncing Russia’s invasion of Ukraine and calling on Russia to immediately withdraw all its troops.

The resolution received 141 votes in support, 5 against, and 35 abstentions, as body held the vote during a rare emergency session. Those voting against the resolution were Russia, North Korea, Eritrea, Belarus and Syria.

“Now, at more than any other point in recent history, the United Nations is being challenged,” US Ambassador to the UN, Linda Thomas-Greenfield, told the UN General Assembly ahead of the vote. “If the United Nations has any purpose, it is to prevent war, it is to condemn war, to stop war. That is our job here today.”

US Congress Weighs Imposing Tariffs on Russian Imports (6:02 p.m.)

Congress is weighing imposing massive tariffs on imports from Russia by revoking Permanent Normal Trade Relations status the country achieved after joining the World Trade Organization in 2012.

Senator Ron Wyden, the chairman of the Senate Finance Committee that oversees trade bills, introduced draft legislation to revoke PNTR for Russia. If passed, the bill would allow the imposition of tariffs far above currently allowable levels. The US has historically imported raw materials from Russia including iron, steel and minerals in addition to oil and gas.

Oligarchs Aven, Fridman Call for Russia to End War (5:30 p.m.)

Russian billionaires Petr Aven and Mikhail Fridman called on Russia to end its war in Ukraine, making them the first oligarchs to directly appeal to Moscow to stop attacking its neighbor.

“We are totally clear: Russia must end this war, now,” they said in a statement seen by Bloomberg. “Every new day, we are again deeply shocked and saddened by the terrible destruction faced by Ukraine and Ukrainians, many of whom are our friends and relatives.”

They stopped short of criticizing Putin, but came out more strongly against Russia’s actions than previously.

Moldova Requests International Help to Manage Refugees (5:23 p.m.)

Moldova, Europe’s poorest country, is asking the European Union and other nations for help handling the arrival of refugees from Ukraine after reaching “its limits,” President Maia Sandu said. More than 112,000 refugees from Ukraine have crossed the border, and about half are still in Moldova and in need of assistance and shelter, she said.

US Task Force to Target Oligarchs’ Assets (5:06 p.m.)

The US Justice Department announced details of a new task force designed to enforce sanctions and export restrictions and to seize luxury assets belonging to Russia’s wealthiest citizens.

The “KleptoCapture” task force will gather experts in sanctions and export control enforcement, anti-corruption, asset forfeiture, anti-money laundering, tax enforcement, national security investigations, and foreign evidence collection, DOJ said in a statement on Wednesday.

“To those bolstering the Russian regime through corruption and sanctions evasion: We will deprive you of safe haven and hold you accountable,” Deputy Attorney General Lisa Monaco said. “Oligarchs be warned: we will use every tool to freeze and seize your criminal proceeds.”

Biden Says US Is Open to Banning Russian Oil, Gas (4:53 p.m.)

President Biden said he’s open to implementing a ban on importing Russian oil and gas, a move that may force up already high prices for American consumers.

“Nothing is off the table,” Biden said as he departed the White House for a trip to Wisconsin.

Baltic Leaders Call on Public to Not Demonize Local Russians (4:50 p.m.)

The leaders of Estonia, Latvia and Lithuania called on the public not to punish their countries’ ethnic-Russian minorities for the Kremlin-led invasion of Ukraine.

Estonian Prime Minister Kaja Kallas warned against stoking tensions with Estonia’s large Russian-speaking population, saying “this is Putin’s war and the Russian people should not be punished for it.”

EU Weighs Blocking Russian Ships (2:56 p.m.)

The European Union is looking at ways to limit access to its ports and waters for Russian vessels, according to people familiar with the discussions, who asked not to be identified because the talks are private.

The EU’s trade chief, Valdis Dombrovskis, told European lawmakers on Monday that there was “some work ongoing” to explore sanctions on Russia’s maritime sector, without giving any details as these measures are not part of his dossier.

Oil, Natural Gas Prices Soar (2:48 p.m.)

European natural gas prices eased after soaring as much as 60% and crude oil topped $110 a barrel amid concerns over Russian supply. OPEC and its allies essentially disregarded the issue at a meeting Wednesday, with delegates saying there was no mention of Russian oil supplies being disrupted.

We Didn’t Want This To Happen, Russian Central Banker Says (2:26 p.m.)

Bank of Russia Governor Elvira Nabiullina sought to reassure staff in a video Wednesday, telling them to focus on their work and avoid political debates.

Calling the current situation “extreme,” she told staff in a video message, “of course, none of us wanted for this to happen, but we’ve done everything so that our financial system and we as the central bank could handle any shock, economic or political.”

Russia more than doubled its interest rate and imposed capital controls in an effort to stabilize the financial system after the US and its allies imposed harsh sanctions, including on the central bank itself.

Russian Default Angst Lingers (2:10 p.m.)

Russia paid a coupon due on ruble bonds on Wednesday, but it’s not clear how foreigners will be able to access the cash after the central bank banned transfers to foreign investors. That means investors are still trying to understand whether or not the bonds could be in default.

The Bank of Russia introduced capital controls after its foreign reserves were frozen by international governments in response to the country’s invasion of Ukraine. The restrictions have raised the prospect of the nation’s first debt default since 1998.

Russia Official Sees Risk of Direct Conflict with NATO (1:30 p.m.)

The risks of inadvertent conflict between Russia and NATO are rising with increased supplies of weapons to Ukraine by alliance members, Deputy Foreign Minister Alexander Grushko said, according to Interfax.

“There’s no guarantee that there won’t be some kind of incident, there’s no guarantee that an incident might not escalate,” Grushko told state television.

Nigeria to Evacuate Citizens From Ukraine’s Neighbors (1:27 p.m.)

Nigeria plans to evacuate more than 5,000 of its nationals from Poland, Hungary and Romania, which neighbor Ukraine, Minister of State for Foreign Affairs Zubairu Dada said.

The West African nation will send planes to repatriate more than 1,000 people this week, with more to follow. The announcement follows reports on social media that some people of color and those from African and Middle Eastern nations were blocked from entering European Union countries as hundreds of thousands flee the fighting triggered by Russia’s invasion.

EU Estimates Sanctions Hit 80% of Russian Banking Sector (12:45 p.m.)

About 80% of the Russian banking sector has so far been hit by EU sanctions, including the exclusion of seven lenders from the SWIFT global payments system, according to an EU official who declined to be named on a confidential issue.

The EU is assessing whether crypto-assets are being used as a possible circumvention route, the official said. The increase in value in some of these assets could be in response to sanctions, but it could also mirror the rise in the value of other assets like gold, the official said.

Vast Majority of Ukrainians Believe They Can Repel Russia: Poll (12:18 p.m.)

A strong majority of Ukrainians — 88% — believe their country will be able to repel the invasion launched by Russia, according to a survey conducted by the Rating pollster.

The poll, conducted on Monday, showed 98% of Ukrainians supported the nation’s army and 93% backed the actions of President Volodymyr Zelenskiy. Four out of five Ukrainians said they were ready to take up arms to defend their country, up from three in five in 2020.

© 2022 Bloomberg


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