(Bloomberg) --

S&P Global Ratings cut Ukraine’s credit grade on Friday after the war-ravaged nation asked foreign creditors for permission to delay payments on its external debt. 

US Secretary of State Antony Blinken said he spoke on Friday with Russian Foreign Minister Sergei Lavrov about a proposed swap to secure the release of two imprisoned Americans, Brittney Griner and Paul Whelan. 

Ukraine said it’s close to restarting grain shipments from two Black Sea ports, although the exact timing remains unclear and subject to the guarantee of a safe corridor. Ten ships already loaded could sail soon, Kyiv’s infrastructure ministry said. 

(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 Bid Discussed by Lavrov and Blinken in a Call
• Ukraine Sees Grain Export Starting Soon as Zelenskiy Visits Port
• Russian Charged With Using US Groups to Sow Political Mayhem 
• Swiss Exports to Russia Surge in Race to Beat Trade Sanctions

On the Ground

With the invasion now well into its sixth month, Russia continues to launch air and missile strikes against military and civilian targets on the territory of Ukraine, according to Ukraine’s military office. Strikes were reported in the Kharkiv area and in the Bakhmut and Zaporizhzhia regions. In the south, Moscow’s troops are focusing on holding occupied positions and preventing a potential Ukrainian counteroffensive. Ground fighting continues north of Kharhiv and Russian forces attempting a limited ground assault in the Kherson region. 

(All times CET)

Ukraine Says Ten Ships Ready to Sail (8:19 a.m.) 

Seventeen cargo ships are loaded with grain at the Black Sea ports of Odesa and Chornomorsk, with as many as ten ready to depart under the deal for safe transit between Ukraine, Turkey, Russia and the UN, according to Ukraine’s Infrastructure Ministry.

“Vessels that had been loaded with grain already in winter are ready to depart” as soon as the UN and Turkey agree on a “green corridor” toward Bosporus, the ministry said in a statement on Saturday, citing minister Oleksandr Kubrakov. 

President Volodymyr Zelenskiy on Friday declared Ukraine “fully ready” to start shipping during a visit to the Chornomorsk Sea Trade Port. The Turkish-flagged vessel Polarnet was shown loading grain. 

Moscow’s Forces in Kherson Brace for Counteroffensive (7:30 a.m.)

The possibility of a Ukrainian counteroffensive into occupied Kherson may be disrupting attempts by Moscow to prepare for a referendum on annexation and to force civilians there to register for Russian passports, according to the Institute for the Study of War. 

The Ukrainian Resistance Center reported that occupation authorities from the United Russia party left Kherson City as Friday, the US-based think tank said. 

More broadly, occupation officials are promoting an organization called “We Are Together with Russia” throughout occupied Ukrainian areas, likely to present the appearance of a “grassroots” call for the Russian annexation, the think tank said.  

Lavrov, Blinken Discuss Possible Prisoner Swap (1:05 a.m.)

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

“I pressed the Kremlin to accept the substantial proposal that we put forth,” Blinken told reporters in Washington in disclosing their call.

Blinken declined to characterize Lavrov’s response. Although Biden administration officials have refused to confirm what they’re offering, a person familiar with the proposal say the US is seeking to trade the two Americans for imprisoned Russian arms dealer Viktor Bout, whose release Moscow has long sought. 

S&P Downgrades Ukraine Over Payment Delay Request (12:40 a.m.) 

Ukraine had its credit grade cut by S&P Global Ratings after the war-ravaged nation asked foreign creditors for permission to delay payments on its external debt after Russia’s invasion.

The country was downgraded to CC from CCC+ on Friday by S&P, which kept a negative outlook given the high probability that officials move forward with plans to restructure its foreign debt. 

The rating could be cut again by S&P to selective default if the government in Kyiv gets bondholders to agree to a two-year payment freeze and changes to coupons on its so-called GDP warrants by the middle of next month.

US Export Controls Devastating for Russia, Raimondo Says (7:47 p.m.)

“We have reason to believe that with each passing week and month, the export controls have an even more devastating effect,” especially because the sanctions were coordinated with allies, US Commerce Secretary Gina Raimondo told reporters in Washington.

She said Russia’s ability to continue the war “continues to dwindle” as its stockpile of spares depletes.

Appearing alongside Raimondo, Secretary of State Antony Blinken said he’s seen “no willingness” by Russia to engage on ending the war and that President Vladimir Putin is trying “to grab as much territory as he can.”

US Readying Another Arms Package, Spokesman Says (6:41 p.m.)

National Security Council spokesman John Kirby said the US will announce additional military aid to Ukraine “very soon.”

Kirby, in a briefing with reporters, declined to specify what would be included in additional presidential drawdown authority. “You can expect to see things in line with the kinds of security assistance you’ve seen in the past,” he said.

US Defense Secretary Lloyd Austin spoke Friday with his Ukrainian counterpart Oleksii Reznikov. 

Ukraine Sees Grain Vessels Leaving Soon (3 p.m.)

Ukraine said it’s close to restarting grain shipments, although the timing will depend on go-ahead from the United Nations, 

“Our side is fully ready,” President Volodymyr Zelenskiy said in the Odesa region, where he watched grain being loaded onto a Turkish ship at Chornomorsk. 

Tass reported that three vessels could leave the port as soon as Friday or Saturday, once a safe corridor was assured. It cited people in Turkey it didn’t identify. 

Polish, Chinese Presidents Speak About 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 readiness to cooperate with Poland in “finding ways to end the conflict peacefully,” according to a statement from the Polish leader’s office that provided no details on potential measures. 

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

Germany to Supply Armored Bridge Layers (1:15 p.m.)

German Defense Minister Christine Lambrecht approved 16 armored bridge layers for Ukraine. The first six will be supplied starting this fall and the remaining 10 in 2023, and the package includes training for Ukrainian personnel, the defense ministry said.

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

Russia and Ukraine Dispute Deadly Prison Strike (12:10 p.m.)

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

Russia’s Defense Ministry said that 40 people were killed and 75 wounded in a HIMARS rocket attack on a detention center for Ukrainian prisoners of war, among them fighters from the Azov battalion. Russian state TV carried footage of destroyed barracks, without showing any wounded or survivors.

The Ukrainian Army said it had not launched any strikes on the settlement concerned, adding that its high-precision weapons supplied by partner countries “deliver extremely accurate strikes” on military targets only. It said that Russian forces had carried out a “targeted artillery shelling” of a correctional facility where Ukrainian prisoners were also being held, with the aim of accusing Ukraine of war crimes and concealing the torture of prisoners and executions. 

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