Providence and Pension Obligation Bonds

The use of POBs rests on the assumption that the bond proceeds, when invested with pension assets in higher-yielding asset classes, will be able to achieve a rate of return that is greater than the interest rate owed over the term of the bonds.

Rhode Island State House; Photo by Mohan Nannapaneni on Pexels

The Trouble with a High Discount Rate, Low Assets Levels, and Cash Flow

Source: Providence July 1, 2020 Actuarial Valuation

POBs May Limit Future Debt Capacity

Studies Generally Show POBs are a Bad Idea and Depend on Timing



Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store