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Rolls-Royce to Sell Pension Liabilities Worth $5.4bn
August 11, 2025
Rolls-Royce Holdings is close to a deal to transfer its UK pension liabilities of nearly £4bn ($5.4bn) to Pension Insurance Corp., potentially marking the largest UK pension risk-transfer in 2025. According to sources, the transaction could be announced this month. The deal would remove the obligations from Rolls-Royce’s balance sheet, freeing it to focus on core operations. Under CEO Tufan Erginbilgic, the company’s shares have surged amid business streamlining and strong demand for its aircraft engines.
Analysts note that the move reflects a broader trend in the UK pension buyout market, driven by higher interest rates and improved funding levels – demand for such risk transfers is expected to hit £500bn ($673.2bn) by 2033. Rolls-Royce became a rising star after returning to IG status last year and was later upgraded by Fitch and Moody’s in March 2025. Rolls Royce is currently rated Baa2/BBB/BBB+ by Moody’s/S&P/Fitch.
Rolls-Royce’s dollar bonds were trading steady, with its 5.75% 2027s at 102.7, yielding 4.26%.
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