EUROPE – Ratings agency Moody’s says it does not intend to follow Standard & Poor’s by conducting an in-depth study into European companies’ pensions liabilities.

Moody’s has issued a statement saying that it has been taking pensions liabilities into consideration for its ratings since 1998.

Richard Stephen, chief credit officer of European corporates at Moody’s, told IPE that he did not understand what had prompted S&P to suddenly place so much emphasis on pensions liabilities now. “Our methodology remains the same and we do focus on funding requirements – but nothing has really changed since implementing this approach in 1998.”

Indeed, in 1998 Moody’s refined its ratings methodology to incorporate pension funding, as it recognised the effects of an “ageing workforce” and “ballooning pensions obligations” facing many countries, and their impact on future liabilities.

It said in its methodology report: “Over time, changes in financial reporting and/or funding practices for pension obligations may act as a catalyst for companies to revise their financing strategies.”

“To the extent that this will affect the financial flexibility of individual issuers, it will be reflected in the rating of the debt obligations of a company.”

Moody’s says it is not engaged in a large pensions study, and neither expects to carry out such an assessment in the near future.

But not everyone is convinced that the move by S&P will have no influence on Moody’s. Says Dresdner Kleinwort Wasserstein: “In whatever way Moody’s deal with this issue, we believe the outcome will be that they, as well, will pay more attention to pension funding than they did before.”

The other main ratings agency Fitch IBCA was unavailable for immediate comment.