US. Debt Market Lures Billions as Verizon, GM Pursue Pension Trade
Employers saddled with swelling pension obligations and higher government fees on those liabilities are finding some relief in the corporate debt market.
Delta Air Lines, Verizon Communications Inc., and FedEx Corp. have issued more than $14 billion in bonds this year in which some proceeds were flagged for bolstering their retirement programs, according to data compiled by Bloomberg. Last year, General Motors Co. did the same, and International Paper Co. had a debt sale as part of a plan to fund expenses including pension costs.
Companies are looking to avoid the higher premiums required on liabilities by the Pension Benefit Guaranty Corp., a government agency that acts as a backstop when plans fail. The cost per thousand dollars of unfunded benefits has more than tripled in recent years, making it more attractive for employers to shift risk to bondholders.
Full Content: Bloomberg
