Pension Woes Pop Up Across the Pond

February 7, 2003 ( -Standard & Poor's Ratings Service (S&P) has cautioned that it might downgrade a dozen European companies due to pension underfunding concerns.

Following a review of pension underfunding for more than 500 European firms, S&P said it placed the long-term and some short-term credit ratings on 10 leading European companies on CreditWatch, according to a report by Dow Jones.

S&P based its analysis on estimates of the value of equity assets in each company’s pension fund at the end of 2002, and on each company’s total unfunded pension obligations.   Much like the tempest of America’s pension funding crunch, sliding stock prices and the slumping global economic markets have intensified the problems at many firms.

The companies affected are:

  • Michelin SCA
  • Rolls-Royce PLC
  • Deutsche Post A
  • GKN Holdings PLC
  • ThyssenKrupp AG
  • Linde AG
  • Portugal Telecom SA
  • Pilkington PLC
  • Arcelor SA
  • TPG NV

In addition, S&P said its ratings on J Sainsbury PLC and BAE Systems PLC, which already were on CreditWatch negative, also are now subject to pension-liability review.

After being placed on CreditWatch, S&P said negative listing can either be affirmed or downgraded. The current listing of the European companies is expected to be resolved within about two months.