Pensions obligations ABS

2006: A German company established to administer pension and medical receivables to be made to it by three German postal companies, has securitised those receivables. The receivables are pension and medcal payment obligations of the postal companies in relation to their retired workers. The admin cmpany is gteed to be kept liquid by an implicit German Govt gtee so the ABS are rated in relation to the credit rating of the German Govt (AAA). Details here and here.

Note: This deal might appear odd because the admin co has to pay those receivables it gets from the postal companies to the retirees. However, this deal is the same as an auto receivables deal. The auto loan provider has its own loans' P&I to pay (just as the admin co has pension payments to make), but the secn looks at the assets side of the BS ie only at the income: the payments the admn co gets, or the auto loans paid by borrowers to the auto loan co. The secn proceeds will be used to replace the liabs on the BS of the auto loan co/. The admin co will repay the ABS from the reeivables itgets from the postal companies and will use the secn proceeds to make the pension paymts to the retirees.