Moody's contends that companies with poorly funded plans may start to redirect cash flows into pensions to avoid having plans deemed "at risk."
Requirements of the new pension bill signed by President Bush on Thursday could have an impact on credit ratings, warns Moody's Investors Service.
In a new report, the credit-rating agency explained that companies with underfunded pension plans will likely borrow to cover the increased contributions that the new Pension Protection Act of 2006 will require starting in 2008. Generally, the additional borrowing will not affect credit ratings because companies will be exchanging pension-related debt for contractual debt, Moody's acknowledged.
See full Article.
Posts
