AT&T got whacked for pension charges:
AT&T Inc. (T), the largest U.S. phone company, recording a $10 billion fourth-quarter charge for its pension plan and said smartphone subsidies put pressure on profit in the period.
The company lowered its expected long-term rate of return for the pension to 7.75 percent, citing “continued uncertainty” for the stock market and the U.S. economy, according to a filing today.
According to the 2011 Annual Report:
Our return on assets assumption was 8.25% for the year ended December 31, 2011. In 2011, we experienced actual returns on investments lower than expected; however, in 2012 we will maintain 8.25% for our expected return on assets, based on long-term expectations of future market performance and the asset mix of the plans’ investments.
Consider the plans’ asset mix, I’d say 7.75% is wildly optimistic:
Pension Assets | Postretirement (VEBA) Assets | |||||
Target | 2011 | 2010 | Target | 2011 | 2010 | |
Equity securities: | ||||||
Domestic | 25% – 35% | 24% | 29% | 34% – 44% | 39% | 42% |
International | 10% – 20% | 15 | 15 | 26% – 36% | 31 | 34 |
Fixed income securities | 30% – 40% | 34 | 34 | 16% – 26% | 21 | 14 |
Real assets | 6% – 16% | 11 | 9 | 0% – 6% | 1 | 1 |
Private equity | 4% – 14% | 13 | 12 0% – 10% | 5 | 4 | |
Other | 0% – 5% | 3 | 1 | 0% – 8% | 3 | 5 |
Total | 100% | 100% |
However, they can proudly declare that they’re not as bad as Illinois:
Three brawling Illinois Democrats are presiding over a fiscal muck that has made the state the new archetype of dysfunction as longtime champion California last week projected its first surplus in a decade.
Years of indecision, gridlock and mismanagement have produced a $97 billion pension-funding deficit and more than $9 billion in unpaid bills, saddling Illinois with the nation’s lowest rating from Moody’s Investors Service. As a result, taxpayers are paying more to borrow, and the state’s ability to provide essential services is withering as annual retirement obligations devour more money.
It was another mixed day for the Canadian preferred share market, with PerpetualPremiums dropping 3bp, FixedResets up 7bp and DeemedRetractibles gaining 6bp. Volatility was low. Volume continued to be heavy.
HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
|||||||
Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
Ratchet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1322 % | 2,502.0 |
FixedFloater | 4.38 % | 3.70 % | 29,237 | 18.00 | 1 | -0.6419 % | 3,709.8 |
Floater | 2.78 % | 3.00 % | 60,970 | 19.73 | 4 | -0.1322 % | 2,701.5 |
OpRet | 4.63 % | 0.73 % | 53,298 | 0.37 | 4 | 0.0096 % | 2,593.0 |
SplitShare | 4.58 % | 4.50 % | 44,705 | 4.32 | 2 | 0.1196 % | 2,908.3 |
Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0096 % | 2,371.1 |
Perpetual-Premium | 5.25 % | -0.54 % | 76,006 | 0.12 | 30 | -0.0303 % | 2,345.7 |
Perpetual-Discount | 4.85 % | 4.87 % | 135,982 | 15.70 | 4 | -0.1015 % | 2,646.3 |
FixedReset | 4.91 % | 2.83 % | 222,340 | 3.64 | 78 | 0.0738 % | 2,480.5 |
Deemed-Retractible | 4.87 % | 1.61 % | 117,943 | 0.34 | 45 | 0.0568 % | 2,428.5 |
Performance Highlights | |||
Issue | Index | Change | Notes |
HSB.PR.D | Deemed-Retractible | 1.10 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2013-02-16 Maturity Price : 25.50 Evaluated at bid price : 25.85 Bid-YTW : -8.74 % |
GWO.PR.N | FixedReset | 1.20 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.68 Bid-YTW : 3.80 % |
Volume Highlights | |||
Issue | Index | Shares Traded |
Notes |
NA.PR.Q | FixedReset | 295,576 | Added to TXPR and TXPL. YTW SCENARIO Maturity Type : Call Maturity Date : 2017-11-15 Maturity Price : 25.00 Evaluated at bid price : 26.36 Bid-YTW : 2.54 % |
ENB.PR.T | FixedReset | 235,283 | Added to TXPR. YTW SCENARIO Maturity Type : Call Maturity Date : 2019-06-01 Maturity Price : 25.00 Evaluated at bid price : 25.45 Bid-YTW : 3.78 % |
GWO.PR.N | FixedReset | 141,890 | RBC crossed two blocks of 65,000 each, both at 23.60. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.68 Bid-YTW : 3.80 % |
BAM.PR.Z | FixedReset | 108,812 | Desjardins crossed 11,800 at 26.45. RBC crossed blocks of 44,700 and 44,600, both at 26.47. YTW SCENARIO Maturity Type : Call Maturity Date : 2017-12-31 Maturity Price : 25.00 Evaluated at bid price : 26.46 Bid-YTW : 3.57 % |
RY.PR.X | FixedReset | 70,216 | Scotia crossed blocks of 26,800 and 40,000, both at 26.89. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-08-24 Maturity Price : 25.00 Evaluated at bid price : 26.95 Bid-YTW : 1.90 % |
MFC.PR.J | FixedReset | 56,866 | Added to TXPR and TXPL. YTW SCENARIO Maturity Type : Call Maturity Date : 2018-03-19 Maturity Price : 25.00 Evaluated at bid price : 25.80 Bid-YTW : 3.44 % |
There were 57 other index-included issues trading in excess of 10,000 shares. |
Wide Spread Highlights | ||
Issue | Index | Quote Data and Yield Notes |
BAM.PR.G | FixedFloater | Quote: 21.67 – 22.31 Spot Rate : 0.6400 Average : 0.4932 YTW SCENARIO |
PWF.PR.L | Perpetual-Premium | Quote: 25.51 – 26.10 Spot Rate : 0.5900 Average : 0.4497 YTW SCENARIO |
VNR.PR.A | FixedReset | Quote: 26.10 – 26.40 Spot Rate : 0.3000 Average : 0.2269 YTW SCENARIO |
FTS.PR.E | OpRet | Quote: 26.70 – 26.95 Spot Rate : 0.2500 Average : 0.1792 YTW SCENARIO |
ELF.PR.F | Perpetual-Premium | Quote: 25.37 – 25.60 Spot Rate : 0.2300 Average : 0.1689 YTW SCENARIO |
IGM.PR.B | Perpetual-Premium | Quote: 26.75 – 26.96 Spot Rate : 0.2100 Average : 0.1607 YTW SCENARIO |
[…] mentioned Illinois’ pension woes on January 17. They’re getting worse: Illinois had its debt rating cut one level to A- by Standard & […]