UPS Bonds Fight `Fire With Fire' to Fill Pension Gap

Discussion in 'The Latest UPS Headlines' started by cheryl, Nov 26, 2010.

  1. cheryl

    cheryl I started this. Staff Member

    UPS Bonds Fight `Fire With Fire' to Fill Pension Gap - Bloomberg

    Companies facing the biggest pension deficit since at least 1994 are selling bonds at the fastest pace in more than seven years to plug the hole, betting that future returns will exceed their borrowing costs.

    The Federal Reserve’s effort to hold down interest rates to stimulate the economy has caused corporate pension obligations, which are pegged to bond yields, to rise by $105.8 billion this year to $1.44 trillion as of October, according to Milliman Inc. Now, companies are taking advantage of borrowing costs at about the lowest on record as Goldman Sachs Group Inc. says interest rates will rise as the global economy recovers.