U.S. President Joe Biden’s planned pension rescue could result in even more money being shunted into investment-grade corporate bonds than previously thought, according to Citigroup Inc. strategists, Bloomberg News reported. The Pension Benefit Guaranty Corp., which insures pensions, issued rules on Friday for bailout money for multi-employer plans that are severely underfunded. These plans can apply for rescue funds as part of the $1.9 trillion pandemic-relief bill signed into law in March. The PBGC said that the pensions are eligible for $94 billion of assistance, which is higher than the $86 billion that Citigroup strategists estimated in May. And the government agency said it is limiting the types of investments the pensions can make with the rescue funds to individual investment-grade fixed-income securities, or funds such as exchange-traded funds, mutual funds or pooled trusts. That increases the “likelihood that funds are channeled” into high-grade bonds, Citi’s Daniel Sorid and James Keefe wrote in a note late Friday. The 124 weakest multi-employer plans were hit hard early in the pandemic, with plunging markets resulting in their only being 34% funded, compared with 74% at the end of 2007, according to a report from actuarial firm Milliman.
