30-Yr Treasury

[MetsMan]

Any thoughts on the basis that will be used to value lump sums under GATT now that the 30-year treasury is being shelved?

The SOA recently asked for input to build a recommendation for a replacement to the 30-yr treasury. Did the SOA know what was up in advance or did they just make a good guess based on expected budget surpluses and the general movement to the 10-yr treasury as the main market benchmark?

[WWSituation]

Is there a report somewhere about this??

Can you post a link?

[WWSituation]

Anybody else think that there are serious implications for defined benefit pension plans that the 30 year bonds are going out of existence?

Is there a reason for their extinction?

[WWSituation]

Found a link

http://www.ustreas.gov/press/releases/po749.htm

[Fuzzy]

My first reactions: plans will have some liqidation problems as the rates go down and the lump sums go up; PBGC premiums will increase; full funding limits will have less application. All of these will call for increased funding or costs...I see another nail in the DB coffin.

Isn't it nice that one branch of the government picks an index for us to use, then another branch eliminates it?

[Intents]

My first reaction: rates will go up as a switch is made to corporate bond rates.

[Dr T Non-Fan]

Interesting. Based on the assumption that we don't need the money. Or don't need to borrow it from that time period. If we're just turning the 30's over when they're due, the the 30 is just arbitrary.
Interesting: The Treasury thinks there are alternatives to 30-year time periods. Is it possibly trying some ALM or cash flow modeling? If so, it should target the whenever the boomlet's prime earning years will be.
Besides, it has decided that starting Feb 2002 it won't sell them. A lot can change between now and then, and the report states that it won't be a costly activity to start selling them again.