Situation on the ground

• Russian forces occupied the Port City of Kherson between Crimea and Odessa according to the Russian defence minister. The Mayor said the city remained in control of Ukrainian forces.
• The International Atomic Energy Agency said Russia took control of the territory around the Zaporizhzhya nuclear power plant in Southern Ukraine – the largest nuclear plant in Europe.
• Ukraine believes a second attempt of talks for a cease-fire is possible.
• The number of refugees fleeing Ukraine reached 875k according to the UN with more than half moving to Poland. The European Union has granted the right for refugees to live and work in the EU for up to three years.¹

Market update

• President Joe Biden said he is open to imposing restrictions on Russian oil and gas exports to the US. Biden said Putin miscalculated and hailed the Ukrainian resistance.
• The CRY commodity index rose more than 4% at 4:30pm GMT as Brent crude oil hit USD 110 per barrel. Wheat prices rose another 7% today, accumulating 37% increase year-to-date.
• The OPEC+ organisation said it would increase output by 400k barrels per day in April, in line with the previous estimate.
• Russia paid a RUB 11bn (USD 98m) of coupon on local bonds but the Central Bank of Russia (CBR) ban on transfers to foreign investors makes the settlement of the payment impossible at this time.
• The CBR said issuers have the right to make decisions on the payment of coupons and dividends on securities and transfer them to the accounting system. However, depositories and registrars will not pay foreign clients, including local currency sovereign bonds.
• The Russian National Settlement Depository (NSD) blocked its Euroclear accounts resulting in settlement and payment issues for the international settlement of Russian government bonds.²
• Trading in Russian hard currency corporate bonds continues, albeit at large discounts and wider spreads.
• On the local currency side, the RUB NDF market continues to function while the UAH market remains closed.
• The EU banned 7 Russian banks from the SWIFT network: VTB, Bank Rossiya, Otkritie, Novikombank, Promsvyazbank PJSC, Sovcombank PJSC and VEB.RF are on its list.

Foreign policy

• China condemned the Russian attack on Ukraine, but stopped short of joining the sanctions applied by the West as Guo Shuqing, the chairman of the China Banking and Insurance Regulatory Commission said China will maintain normal economic and trade exchange with relevant parties.

1. See https://www.theguardian.com/world/2022/mar/02/ukraine-refugees-right-to-live-in-eu-plan

2. See https://www.euroclear.com/newsandinsights/en/Format/Articles/update-on-our-link-with-Russia.html