Situation on the ground

• Kyiv was under missile fire overnight.
• Ukrainian officials confirmed Russia took over the local government headquarters of Kherson, a Black Sea port city of 280,000. It is the first major city to fall since the beginning of the invasion a week ago. The city of Mauriupol is under siege.
• Ukraine said that Russia is sending four amphibious assault ships to land troops near Odesa and try to seize the city.
• Germany said it will provide 2,000 surface-to-air rockets manufactured in the former Soviet Union.
• Russian Foreign Minister Sergey Lavrov said the demilitarisation of Ukraine will be completed, even if a peace agreement is signed.
• Putin told French President Emmanuel Macron that Russia would fulfil its goals in Ukraine, warning that all was going according to plan and said things will get worse. Putin also denied Russia bombed Kyiv or hurt civilians.
• An Estonian ship sank in the Ukrainian coast near Odesa after an explosion, possibly caused by a mine, Reuters reported.

Market update

• The Central Bank imposed a 30% surcharge to foreign exchange (FX) transactions overnight.
• The Russian local stock market remained closed for the third consecutive day.
• The London Stock Exchange suspended trading on Russian depository receipts (DRs). US DRs have been suspended since Monday.
• The index providers MSCI and FTSE Russell cut Russian stocks from their respective indices. MSCI reclassified Russia to standalone status (not included in any index) alongside with Bulgaria, Ukraine, Ghana, Lebanon and Argentina.
• Russia was downgraded by Fitch by six notches to B while Moody’s cut them by seven to B3 (equivalent to B-), mostly due to the severity of sanctions.
• The next Eurobond coupon payment is due on 16 March where USD 107m is due. With the conflict still escalating and capital controls imposed, a default is likely after the 30-day grace period in mid-April.
• Bondholders said that Yandex paid the coupon on their Dollar debt. It is possible that the cash was transferred pre-sanctions.