Flash: Solvency boost from rising bonds – Goldman Sachs

FXstreet.com (New York) - According to the Economics Research Team at Goldman Sachs, “Falling bond yields have weighed on pension fund and insurance company solvency over recent years, and rising bond yields are therefore a clear positive as their liabilities are discounted more.”

Moreover, “We see two potential implications of better solvency going forward, industry-wide pension funds might take more risk in their asset allocation, and corporate pension funding risks are likely to ease and corporates might restructure them further to reduce future risks. Also, the valuation discount on companies with large pension liabilities should decline.”