GERMANY – German industrial group ThyssenKrupp says it is in “intense dialogue” with Standard & Poor’s following the ratings agency’s decision to put it on credit watch negative because of its pension liabilities.

“ThyssenKrupp is engaged in an intensive dialogue with S&P and will discuss the change in the way S&P views accrued postretirement obligations in detail,” the company said in a statement.

It said that S&P placed the company on credit watch “despite the fact that at ThyssenKrupp itself there have been no negative developments or changes in trends; the only thing that has changed is S&P’s basic assessment of postretirement obligations”.

The company said that in its financial statements for the year ended September 30 2002, it made it clear that it had a total 7.1 billion euros in accrued pension and similar obligations.

The obligations break down into 6.2 billion euros for accrued pension liability; 567 million accrued postretirement obligations other than pensions and 275 million euros in other accrued pension-relation obligations.

It said it gave S&P a detailed report of its pension funding situation on December 1.

S&P on February 7 put 11 European companies on credit watch due to their pension liabilities. It said that the companies are “those for which deteriorated equity values may have created substantial pension deficits, or for which the flexibility under the existing ratings, factoring in all other aspects of S&P’s credit analysis, appeared insufficient to offset the negative impact of total post-retirement deficits”.

The companies marked out by S&P were: Arcelor, Michelin,
Deutsche Post, Deutsche Postbank, GKN, Linde, Pilkington, Portugal Telecom, Rolls-Royce, ThyssenKrupp and TPG.

S&P has been criticised for basing its decision not on new information but on changes to its method. Fellow ratings agency Moody’s has said it does not intend to follow S&P’s lead, saying it has taken pensions liabilities into consideration since 1998.