Pensions Liabilities Cut Room for Manoeuvre
Financial Times (03/18/03) p.23; Van Duyn, Aline

Pension liabilities are beginning to affect the flexibility of companies, as ratings agencies continue to downgrade those with huge pension deficits. Standard & Poor's (S&P) and other ratings agencies are now viewing pension liabilities as debts that need to be repaid, and until deficits are reduced, many companies will not have the financial flexibility they need to expand or invest. Companies are now searching for ways to be more financially flexible despite their pension liabilities, and some are turning to increased equity-linked investments to improve balance sheets and reduce debts. S&P recently issued a report citing 12 European companies as on the brink of a ratings cut due to their pension liabilities. Globally, pension deficits are estimated at $2,500 billion, and companies in the United States, United Kingdom, and the Netherlands are the most exposed, according to ABN Amro analyst Alistair McCreadie.

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