hard · Debt Capital Markets
A corporate issuer has an underfunded pension plan with a net liability of $250 million.
When calculating the issuer's credit ratios for a new bond issuance, how should an analyst treat this liability?
- Treat it as a 'contingent' equity component
- Subtract it from the company's cash balance
- Add the net deficit to the total debt amount
- Ignore it as it is a non-cash accounting item
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