Pension deficits put firms on credit watch
LONDON - S&P put the bonds of 12 European companies on credit watch with negative implications, a prelude to downgrading their investment ratings, because of concerns about the companies' pension deficits. The companies include: Arcelor SA; Deutsche Post AG; GKN Holdings PLC; Linde AG; Pilkington PLC; and Rolls-Royce PLC.
J. Sainsbury & Co. PLC and BAE Systems PLC, both of which already were on negative credit watch because of their massive pension deficits, could be downgraded two notches.
Survey: Asset-liability gap top fear in U.K.
LONDON - Administrators of British corporate pension schemes say the growing gap between pension assets and liabilities is their greatest concern, according to a survey of 100 administrators published today by SEI Investments. In addition, 38% of respondents said they were considering closing their defined benefit pension arrangements because of underfunding.
Falling stock markets, weaker yields on bonds and increasing liabilities have pushed pension schemes into deficit to the tune of $2.5 trillion as of Dec. 31, according to a study by Watson Wyatt last week.
Only 13% of respondents in the SEI study were concerned about compliance with the Myners recommendations; 49% said they were concerned about the British government's indecision about pensions change.