- 85.8 per cent of private creditors accept Greek bond-swap.
- Merkel 'pleased' with high participation.
- Broker downgrades take their toll on miners, oil stocks.
The FTSE 100 index was trading just a few points lower by midday as Greece's crucial debt-swap deal failed to inspire confidence in the markets.
Greece 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 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%.
German Chancellor Angela Merkel said she was "pleased" with the high level participation of private creditors, according to her chief spokesman Steffen Siebert. "What's important now is for Greece to seize the opportunity offered by this debt swap, meaning it implements the agreed programs," Siebert added.
The question now remains as to whether this will be considered a default or not. The International Swaps and Derivates Association (ISDA) will meet this afternoon to discuss the question and to determine whether a credit event has occurred.
According to analyst Jodie Gray from Barclays Capital, the activation of the CACs and the likely trigger of credit default swaps (CDSs) will not be of systemic importance. "While we cannot rule out potential unforeseen problems through the settlement process of CDS or the potential inability of a counterparty to meet its commitments, we think that the relatively small amount of net notional exposure (c $3bn), and improvements in counterparty risk management over the last three years mean that the process is likely to be relatively uneventful," Gray said.
FRESNILLO FALLS AFTER DOWNGRADE
Miners were keeping the Footsie from breaking into positive territory, with silver and gold producer Fresnillo being the worst performer after Deutsche Bank downgraded its rating on the stock from buy to hold and cut its target from 1,925p to 1,875p. Sector peers Kazakhmys, Vedanta, Xstrata and Glencore were out of favour too.
Oil stocks were also in the red this morning. Shell was lower after Bernstein downgraded its rating from outperform to neutral, while Tullow Oil was feeling the effects of a downgrade from Societe Generale, which cut its recommendation from buy to hold. BG Group, which had its target price upped by UBS, was among the losers of the day after Goldman Sachs cut its rating from conviction buy to buy. BP was registering losses of around 1%.
In contrast, Cairn Energy was performing well after Societe Generale upgraded the stock from hold to buy.
Engineering group Weir was in the red as it looks like it will lose its battle with Danish rival FLSmidth for the takeover of Australian mining equipment firm Ludowici after FLSmidth's offer was allowed to proceed by the Australian Takeovers Panel.
Leading the risers was temporary power and temperature control solutions provider Aggreko after seeing strong growth in revenues in 2011 despite going up against tough comparative figures from 2010, a year which saw the FIFA World Cup, the Winter Olympics and the Asian Games.
Pharmaceuticals group Shire seemed to be benefitting from UBS's decision, announced today, to go 'overweight' on the sector.
FTSE 250: LSE, HUNTING, PERFORM LEAD THE RISE
Longon Stock Exchange (LSE) was the high riser of the morning after saying that it will acquire a majority stake in LCH.Clearnet. The terms value LCH.Clearnet at €813m (£677m).
Oil services firm Hunting was registering big gains, a day after the release of its full year results. Meanwhile, digital sports media group Perform was extending gains made yesterday when Credit Suisse said "we believe that Perform's rights portfolio, digital positioning and resultant top-line growth will likely attract potential acquisition interest."
FTSE 100 - Risers
Aggreko (AGK) 2,280.00p +2.47%
ITV (ITV) 88.55p +2.19%
Schroders (SDR) 1,582.00p +2.06%
Land Securities Group (LAND) 715.00p +2.00%
International Power (IPR) 364.90p +1.87%
Schroders (Non-Voting) (SDRC) 1,258.00p +1.86%
Essar Energy (ESSR) 111.00p +1.83%
BT Group (BT.A) 219.90p +1.71%
Shire Plc (SHP) 2,241.00p +1.63%
British Sky Broadcasting Group (BSY) 705.00p +1.59%
FTSE 100 - Fallers
Fresnillo (FRES) 1,755.00p -3.78%
Kazakhmys (KAZ) 941.50p -2.54%
Smith & Nephew (SN.) 616.50p -1.67%
BP (BP.) 488.15p -1.27%
Tullow Oil (TLW) 1,443.00p -1.16%
Standard Life (SL.) 234.50p -1.14%
Xstrata (XTA) 1,135.00p -1.05%
ARM Holdings (ARM) 563.50p -0.97%
Glencore International (GLEN) 401.25p -0.95%
Standard Chartered (STAN) 1,551.00p -0.86%
FTSE 250 - Risers
Perform Group (PER) 318.90p +11.89%
London Stock Exchange Group (LSE) 971.50p +8.18%
Hunting (HTG) 921.00p +7.59%
Rentokil Initial (RTO) 79.25p +5.04%
Dairy Crest Group (DCG) 340.00p +4.26%
Taylor Wimpey (TW.) 49.82p +3.88%
SEGRO (SGRO) 251.60p +2.90%
Supergroup (SGP) 585.00p +2.90%
Regus (RGU) 111.20p +2.77%
Hays (HAS) 84.60p +2.67%
FTSE 250 - Fallers
Heritage Oil (HOIL) 163.30p -3.26%
Centamin (DI) (CEY) 81.90p -2.21%
Dixons Retail (DXNS) 14.21p -2.13%
BH Global Ltd. USD Shares (BHGU) 11.75 -1.92%
Dunelm Group (DNLM) 485.50p -1.72%
Yule Catto & Co (YULC) 208.60p -1.70%
Allied Gold Mining (ALD) 119.00p -1.65%
Barratt Developments (BDEV) 139.60p -1.62%
Misys (MSY) 341.00p -1.45%
Murray Income Trust (MUT) 659.50p -1.42%