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| Boots: made an astute move into bonds but
hasn't had a rating benefit; J Sainsbury and Rolls
Royce: both on negative credit watch after sticking
with equities |
DESPITE THREE YEARS of negative returns many pension
funds have failed to make any significant changes to their
investments, but shortfalls are hurting companies as never
before. In an unprecedented move in February, Standard &
Poor's issued a hit list of 12 European companies that might
be downgraded because of pension liabilities. New accounting
standards that force companies to mark their pension
liabilities to market have added to the pressure.
UK corporates are under particular strain since their pension
funds typically have higher equity allocations than those in
continental Europe. US pension funds also have high equity
weightings but they are not under the same pressure to mark
liabilities to market.
The timing for corporates couldn't be worse, as equity markets
continue to sink...
