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ANALYSIS
March 2, 2009
Sagging Index no longer reflects what’s going on in the market, some say, Replacements? Google it, to start.
March 2, 2009
Downward price spiral will actually boost the cost of capital for most companies. CFOS, take note.
March 2, 2009
The latest bailout at AIG could be a preview of how the president will deal with Wall Street.
March 2, 2009
No corporate defaults. Big debt offerings. Percolating CP issuance. Things may be looking up in the capital markets.
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April 7, 2008 3:39 PM ET
For large corporate pension plan sponsors, it appears things have gone from bad to worse in a hurry. According to a new report from Mercer, large corporations saw their pension plans lose a collective $70 billion off their combined funded status during the volatile first quarter. Adrian Hartshorn, a principal in Mercer’s financial strategy group, pointed out that pension plans sponsored by S&P 1500 companies are now only 98% funded. That’s down from a funded status of roughly 105% at the end of 2007. “It was a particularly turbulent period for the equity markets,” said Mr. Hartshorn. “And corporations are quite vulnerable to such volatility.” Most corporations still have the vast majority of their pension plan assets invested in equities, he said. Not surprisingly, a 10% drop in the S&P 500 during the first three months of the year triggered the plunge into underfunded territory. Over the past five months the value of the assets of pension plans sponsored by large companies dropped by $140 billion. Combined, these companies’ pension plans were operating at a $120 billion surplus at the end of October 2007. Now, Mercer says the plans are sporting a $20 billion deficit. “All things considered, however, companies could have been in much worse shape,” Mr. Hartshorn said, pointing out that high-quality corporate bond yields increased during the first quarter, prompting corporations’ calculated liabilities to decrease. “The rise in yields provided some relief—just not enough to offset the blow plan sponsors sustained in the equity markets.”
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