General Motors U.S. Pension Funds Harvard Case Solution & Analysis

In June 2003, the Corporation General Motors (GM) has successfully sold the largest corporate debt offering in U.S. history, $ 17.6 billion. The proposal to include $ 13.6 billion of debt, expressed in dollars, euros and pounds, and $ 4 billion, expressed in convertibles. GM has announced that it will use most of the proceeds to strengthen its highly inadequate US-retirement plan. GM consider investing the entire contribution to its U.S. pension funds from the debt offering is not a traditional investment grade bonds or stocks, but in the broad category of GM called "alpha." GMAM believes that this will help to meet its new target annual returns of 9%, reduce the likelihood of a negative return in any given year from 20% to 10%, and reduce the volatility of plan assets at 40%. "Hide
by Luis M. Viceira, Helen H. Tung Source: Harvard Business School 25 pages. Publication Date: July 5, 2005. Prod. #: 206001-PDF-ENG

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