OREANDA-NEWS. The current environment of low interest rates and low investment returns poses challenges for defined benefit pension schemes, says Fitch Ratings. One option that corporates have to address the situation is to raise debt at historically very low rates to deploy in addressing fund deficits.

This has the potential to affect credit ratings for corporates, given that our criteria adopt a cash-flow based treatment of pension obligations rather than a balance sheet capitalisation approach. Raising debt to fund pension deficits can therefore lead to an increase in Fitch-calculated leverage metrics.