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Defined-Benefit Obligations Still Weigh On Financial Risk Profiles Of European Companies And Are Likely To Worsen Dec 11
Standard & Poors, Dec 2011
Abstract
Obligations for defined-benefit pensions and other postretirement benefit schemes (collectively, PRBs) are a drag on many European companies. In a sample of 50 such companies, PRB deficits remained broadly constant from 2009 to 2010, at about 14% of reported debt. However, a combination of higher defined-benefit obligations and lower asset values could significantly increase deficits in postretirement benefit schemes for the 2011 financial year, in Standard & Poor's Ratings Services' view. Forthcoming accounting changes for companies reporting under International Financial Reporting Standards (IFRS) will also significantly affect the reported metrics of certain companies. Although all asset categories are prone to a certain level of market risk, the performance of equities (constituting about 39% of plan assets in our selected sample...
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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