Post Office Uses Debt to Fund Retirement

Post office uses debt

Many countries and corporations around the world acquire debt to finance major projects. These entities will typically issue bonds to finance objectives such as building new bridges and constructing new processing facilities. Bonds can also be used to fund future financial obligations, which is what a certain postal organization accomplished by issuing its own bonds.

In December 2012, Deutsche Post issued more than $2.6 billion in bonds to finance future German employee retirement payments. The 10-year, 2.95 percent convertible bonds were snapped up by investors who see the German Post Office as a good investment opportunity for the future.

Deutsche Post is already a publicly traded company on the German stock exchange. Its shares have seen an increase of approximately 34 percent when it issued the bonds. The new financing should allow the German organization to better prepare for future expansion opportunities in its DHL division by spreading the payment of retirement obligations over a 10-year time frame.

Do you think USPS could issue bonds to finance its retirement obligations?

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5 Comments

  1. You betcha, think it would be a good idea to offset the ridiculous requirements congress has put on an agency that didn’t have a problem before.

  2. Grannybunny

     /  January 28, 2013

    No, I do not think USPS should take on any more debt, in any form, bonds or otherwise. Nor, do I think it is possible under our current enabling legislation.

  3. Anonymous

     /  January 29, 2013

    This would be a great idea as the USPS is always looking for ways to help fund its retirement and health benefits.

    • Grannybunny

       /  January 29, 2013

      The Postal Service’s retirement benefit accounts are both overfunded: CSRS by $50-75 billion — depending upon which audit one accepts — and FERS by $6+ billion.

  4. Jonn

     /  January 29, 2013

    I guess there really isn’t much USPS can do until congress acts. Neither selling bonds nor accessing overpayment is an option. I just hope the folks in Washington don’t wait to act until postal employees miss a paycheck.

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