US Pensions Poised to Stock Up on Corporate Debt After Big Gains
- Pension plan funding is at 103.7%, highest level in 18 months
- Strategists expect wave of bond purchases as managers de-risk
Demand from company pension funds is at least one reason why valuations for US corporate bonds are so high now.
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US company pensions are poised to shift billions of dollars into corporate credit, after months of stock-market gains and higher bond yields have left them awash with cash, analysts and advisers said.
Corporate pension plans had 103.7% of the funding they need to meet obligations as of June, the highest level since 2022, according to the Milliman 100 Pension Funding Index. That metric has dropped below 100% only four times since March 2022. Big gains in US stocks have helped, with the S&P 500 up about 18% this year on a total return basis.