S&P downgrades as Kyiv calls for payment freeze

(Bloomberg) – S&P Global Ratings downgraded Ukraine’s credit rating on Friday after the war-torn country asked foreign creditors for permission to delay payments on its foreign debt. US Secretary of State Antony Blinken said he spoke with Russian Foreign Minister Sergei Lavrov on Friday about a proposed swap to secure the release of two imprisoned Americans, Brittney Griner and Paul Whelan.

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Ukraine has said it is close to restarting grain shipments, although the timing depends on a green light from the United Nations. President Volodymyr Zelenskiy visited the Odessa region to watch the loading of grain at the port of Chornomorsk.

Chinese Xi Jinping spoke with his Polish counterpart a day after a long call with US President Joe Biden.

President Emmanuel Macron appealed to Saudi Crown Prince Mohammed bin Salman to help Europe move away from Russian oil and gas during a dinner in Paris on Thursday.

(See RSAN on the Bloomberg Terminal for the Russian sanctions dashboard.)

Key developments

  • Ukraine downgraded by S&P as default becomes ‘virtual certainty’

  • US prisoner swap offer discussed by Lavrov and Blinken in call

  • Ukraine sees grain export start soon as Zelenskiy visits port

  • Russian accused of using US groups to sow political chaos

  • Swiss exports to Russia increase in race to beat trade sanctions

On the ground

Local authorities reported missile strikes in Kharkiv and nighttime shelling of the southern port city of Mykolaiv. Russian shells landed near a public transport stop in Mykolaiv, killing at least five people, regional governor Vitaliy Kim said on Telegram. The attack took place after the Russians struck the city’s residential area on Thursday evening, destroying several buildings. Ukrainian troops struck Russian ammunition depots in Ilovaysk and Brylivka, located in the seized areas in the east and south of the country respectively, Ukrayinska Pravda reported, citing the military staff’s Telegram channel.

(every hour CET)

Lavrov and Blinken discuss a possible prisoner swap (1:05 ​​a.m.)

Blinken said he spoke with Lavrov on Friday about the proposed trade that could result in the release of Griner, a WNBA star, and Whelan, a former Marine.

“I pressed the Kremlin to accept the substantial proposal we presented,” Blinken told reporters in Washington as he revealed their appeal.

Blinken declined to characterize Lavrov’s response. Although Biden administration officials declined to confirm what they are proposing, a person familiar with the proposal said the United States was seeking to trade the two Americans for imprisoned Russian arms dealer Viktor Bout, whose Moscow has long demanded the release.

S&P downgrades Ukraine following late payment request (00:40)

Ukraine has had its credit rating downgraded by S&P Global Ratings after the war-torn nation asked its foreign creditors for permission to delay payments on its foreign debt following Russia’s invasion.

The country was downgraded to CC from CCC+ on Friday by S&P, which kept a negative outlook given the high likelihood that the authorities will go ahead with plans to restructure its external debt.

The rating could be further downgraded by S&P to selective default if the Kyiv government forces bondholders to accept a two-year payment freeze and coupon changes on its so-called GDP warrants. by the middle of next month.

US export controls are devastating for Russia, says Raimondo (7:47 p.m.)

“We have reason to believe that with each passing week and month, export controls are having an even more devastating effect,” not least because the sanctions have been coordinated with allies, the U.S. secretary told the Commerce, Gina Raimondo, to reporters in Washington.

She said Russia’s ability to continue the war “continues to dwindle” as its stock of spare parts runs out.

Appearing alongside Raimondo and their visiting Japanese counterparts, Secretary of State Antony Blinken said he saw “no will” from Russia to commit to ending the war and that President Vladimir Putin was trying “to grab as much territory as possible”.

US preparing another weapons package, spokesperson says (6:41 p.m.)

National Security Council spokesman John Kirby said the United States would “very soon” announce additional military aid to Ukraine.

Kirby, in a briefing with reporters, declined to specify what would be included in the additional presidential withdrawal authority.

“In general terms, you can expect to see things consistent with the kinds of security assistance you’ve seen in the past,” he said.

Naftogaz cut by default by Fitch after missing key deadline (6:35 p.m.)

NJSC Naftogaz Ukrainy defaulted on its foreign bonds after the Ukrainian energy giant missed a deadline to redeem a $335 million bond, according to Fitch Ratings.

The company’s credit rating was downgraded to RD – or Restricted Default – from C on Friday by Fitch, which cited the expiry of a grace period on its missed Eurobond repayment due July 19, as well as failure to obtain creditor approval. for its initial solicitation of consent to vary the terms of the Bonds.

Naftogaz is still trying to negotiate a deal with holders of about $1.4 billion of its bonds and will “urgently” come up with a new plan for bondholders, it said earlier this week. The company said Tuesday it was on track to default because a grace period to buy back $335 million in bonds due last week expired.

Ukraine sees grain ships leaving soon (3 p.m.)

Ukraine has said it is close to resuming grain shipments, although the timing depends on the green light from the United Nations,

“Our camp is fully ready,” President Volodymyr Zelenskiy said in the Odessa region, where he saw grain being loaded onto a Turkish ship in Chornomorsk.

Tass said three ships could leave port as early as Friday or Saturday, once a safe corridor is secured. He cited people in Turkey whom he did not identify.

Polish and Chinese presidents talk about the war (2:57 p.m.)

Chinese President Xi Jinping discussed the war in Ukraine during an hour-long call with Polish President Andrzej Duda on Friday, a day after Xi spoke with US President Joe Biden.

Xi expressed his willingness to cooperate with Poland to “find ways to end the conflict peacefully”, according to a statement from the Polish leader’s office which did not provide any details on potential measures.

Both underlined the importance they attach to respect for the sovereignty and territorial integrity of all states, including Ukraine,” according to the Polish version.

Germany to provide armored bridge layers (1:15 p.m.)

German Defense Minister Christine Lambrecht has approved 16 armored bridgelayers for Ukraine. The first six will be provided from this fall and the remaining 10 in 2023, and the program includes training for Ukrainian personnel, the defense ministry said.

Berlin said on Thursday it had agreed to supply Ukraine with mobile decontamination units worth more than 860,000 euros ($870,000). Additional equipment provided in July includes three self-propelled howitzers, three multiple rocket launcher systems and more than 100 vehicles of various types, according to the ministry.

German Foreign Minister says Putin must be thwarted (1:00 p.m.)

Annalena Baerbock stressed the importance of standing up to Russian President Vladimir Putin, saying it will help deter other potential attackers.

“We are ensuring that small nations can continue to sleep peacefully and not have to fear that a stronger neighbor will invade in violation of international law,” Baerbock said at a press conference in Athens with his Greek counterpart. , while expressing his understanding for Greece. concerns about neighboring Turkey.

Greek Foreign Minister Nikolaos Dendias said Russia’s assault on Ukrainian sovereignty could not succeed because Greece could suffer a similar fate and become “the next victim”.

Russia and Ukraine challenge deadly prison strike (12:10 p.m.)

Ukraine and Russia have swapped accusations of deliberately attacking a facility where prisoners were held in the occupied Donetsk region, with Moscow’s military saying Ukraine hit it with state-supplied weapons States, and Kyiv calling it a Russian provocation.

The Russian Defense Ministry said 40 people were killed and 75 injured in a HIMARS rocket attack on a detention center for Ukrainian prisoners of war, including fighters from the Azov battalion. Russian state television broadcast images of destroyed barracks, without showing any injuries or survivors.

Ukraine’s military said it had not launched any strikes on the affected settlement, adding that its high-precision weapons supplied by partner nations “deliver extremely precise strikes” on military targets only. He said Russian forces carried out a ‘targeted artillery shelling’ of a correctional facility where Ukrainian prisoners were also held, in a bid to accuse Ukraine of war crimes and cover up the torture of prisoners and executions.

Lavrov to listen to prisoner exchange proposal (11 a.m.)

Lavrov said the Russian and US sides agreed on a time for their call, during which he also wanted to discuss the deal unlocking grain exports from Ukraine.

Blinken said Wednesday he expected to talk to Lavrov about a possible prisoner exchange between Russia and the United States as well as the Ukrainian grain export deal. The Kremlin said no agreement had yet been reached on a detainee swap.

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Elaine R. Knight