London pre-open: Muted initial reaction to Greek bond swap

9th Mar 2012 07:32

City sources predict the FTSE 100 will open up five points from yesterday's close of 5,859.73 after stocks already made strong gains in the previous session on reports that the Greek debt swap would be a success. Greece has announced that 85.8% of its private bondholders have decided to accept a "voluntary" 53.5% haircut on their debt. At the same time Athens has indicated that it plans to implement the collective action clauses (CACs) that will force all non-accepting investors to exchange their debt, thus resulting in a full participation rate of 95.7%.The question remains as to whether this will be considered a default or not. The International Swaps and Derivates Association (ISDA) will meet at 1 pm London time to discuss the question and to determine whether a credit event has occurred.Initial market reaction seems quite muted. The euro/dollar is moderately off this morning (falling 0.40% to 1.3223), but Spanish and Italian 10 year bonds are actually slightly higher at the moment. As well, investors are likely to be feeling even more cautious than usual, as they wait to receive the data for nonfarm payrolls, expected out later today. Bank of England policy maker Andrew Sentance seems to have indicated this morning during an interview on Bloomberg TV that he would not favour (at least for now) a QE4. Savings, investments and insurance giant Old Mutual saw a strong increase in adjusted profits in 2011 despite a fall in funds under management and net client cash flows. Adjusted operating pre-tax profit jumped 14% to £1,515m in the 12 months ended December 31st.Balfour Beatty, the FTSE 250 infrastructure group, has announced that Balfour Beatty Communities, a division of its US PPP concession arm, has reached financial close on a $362m (£230m) military homes project for the US Department of the Air Force.Like-for-like (LFL) sales in the first half of its financial year rose 2.1% on a year-on-year basis at pub group JD Wetherspoon, but the firm confessed that trading in the six weeks to March 4th has been disappointing, with LFL sales declining 0.7%. Revenue in the 26 weeks to January 22nd rose to £569.4m from £525.4m the year before. Profit before tax edged up to £33.2m from £32.2m a year earlier, below forecasts from Panmure Gordon (£33.9m) and Peel Hunt (£34.7m).