HomeMy WebLinkAboutInvestment Report - May 2006CITY OF PALM DESERT
FINANCE DEPARTMENT
INTEROFFICE MEMORANDUM
TO: RACHELLE KLASSEN, CITY CLERK
FROM: NIAMH ORTEGA, RECORDING SECRETAR`\Z
DATE: JUNE 27, 2006
SUBJECT: COMPLIANCE ANALYSIS AND INVESTMENT REPORTS
Please find attached the Compliance Analysis and Investment Reports for May 2006
which were presented and approved at the meeting of June 27, 2006. Please include
on the upcoming agenda for review and acceptance by City Council.
Please feel free to contact me at Ext. 382 if you have any questions. Thank you.
nmo
Attachment (as noted)
G:\Finance\Niamh Ortega..Wpdocs\Investment Committee\Memos\rklasseninvreport.wpd
Paul S. Gibson, C.C.M.T., Treasurer
Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer
Treasurer's Commentary
The Federal Open Market Committee (FOMC) will meet next on 28-29 June. The market has assigned a 100 percent
probability to another 25 basis -point increase in the Federal Funds Rate, bringing it to 5.25 percent. Chairman Bernanke
commented that while the economy is "transitioning" to a slower growth rate (due largely to a slowdown in the housing
market), recent inflation data and expectations were still too high for comfort. The FOMC is willing to sacrifice some
economic growth in order to strengthen Bernanke's inflation -fighting reputation. The result may be sub -par economic growth
over the next four quarters, with Gross Domestic Product (GDP) at around 2.5 percent.
High energy prices are forcing consumers to cut spending elsewhere. Oil prices are expected to peak this year at $80 a
barrel in August. Over time, however, the price trajectory will continue to be upward as Asian petroleum consumption
eventually outpaces U.S. petroleum consumption. The amount of oil on the market is being further reduced by Chinese
forward contracts that are intended to tie up crude oil supplies for years to come. China is currently competing with the U.S.
for the petroleum resources of Alberta, Canada.
Chinese exports are expected to grow 20 percent this year, despite some appreciation in the Yuan. The continued rapid
growth of Chinese exports should expand global supply enough to keep global inflation stable.
Dollars in Thousands
Pas 6'avon. c.C..AIr.
Treasurer
PORTFOLIO STATISTICS
MAY-06 APR-06 MAR-06 FEB-06 JAN-06 DEC-05
CITY
Month -End Book Value*** $ 179,707 $ 150,753 $ 149,944 $ 147,007 $ 147,649 $ 143,187
Month -End Market Value*** $ 178,862 $ 149,906 $ 149,118 $ 146,312 $ 146,991 $ 142,231
Paper Gain (Loss) $ (845) $ (847) $ (826) $ (695) $ (658) $ (956)
Prior Year Book Variance $ 7,292 $ 4,436 $ 3,087 $ 4,320 $ 7,431 $ 18,463
Interest Earnings $ 531 $ 506 $ 513 $ 476 $ 454 $ 460
Yield -To -Maturity 4.62% 4.47% 4.38% 4.31% 4.06% 3.95%
Weighted Maturity (Days) 418 419 415 414 210 215
Effective Duration 0.67 0.71 0.73 0.76 0.27 0.29
RDA
Month -End Book Value *** $ 137,456 $ 142,678 $ 149,459 $ 153,652 $ 151,779 $ 125,395
Month -End Market Value*** $ 136,700 $ 142,043 $ 148,888 $ 153,233 $ 151,479 $ 124,957
Paper Gain (Loss) $ (756) $ (635) $ (571) $ (419) $ (300) $ (438)
Prior Year Book Variance $ 13,083 $ 17,442 $ (8,865) $ (5,453) $ (8,781) $ (22,407)
Interest Earnings $ 537 $ 522 $ 553 $ 494 $ 435 $ 385
Yield -To -Maturity 4.62% 4.50% 4.38% 4.26% 3.99% 3.82%
Weighted Maturity (Days) 445 429 410 415 128 153
Effective Duration 0.86 0.86 0.86 0.86 0.15 0.20
** Omits SLGSs.
Dollars in Thousands
Ageing Interval
<1M
< 2M
< 3M
< 6M
< 1YR
< 2YR
< 3YR
< 4YR
< 5YR
> 5YR
Total:
City of Palm Desert -- Portfolio Characteristics
31 May 2006
Market Value
$ 39,410
5,915
8,906
5,832
21,554
18,564
$ 100,181
Ratings * Market Value
AAA $ 59,202
AA $ 2,079
A $ 5,982
Unrated ** 60,510
BB- 10,056
Total: $ 137,829
Sector Market Value
MMFs $ 18,595
LAIF 27,725
RDA Loan 32,785
MTNs 22,015
Agencies 36,709
CP -
Total: $ 137,829
General Fund Ageing'
0
100
80
60
0 39
0 40 -,
a 22
20 6 9 6 n
0 o i n r-
0 r
< 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR
Credit Quality!
Asset Allocation)
Unrated **
44%
RDA Loan
24%
LAIF
20%
MMFs
13%
AA
2%
A
4%
MTNs
16%
Agencies
27%
Month City Yield LAIF Yield Variance Performance'
Jun05 3.29 2.97 0.32 I
Jul 3.37 3.08 0.29 ! 4.8
Aug 3.43 3.18 0.25
Sep 3.56 3.32 0.24 4.3
Oct 3.67 3.46 0.21
Nov 3.81 3.64 0.17 0 3.8
Dec 3.95 3.81 0.14 }
Jan06 4.06 3.96 0.10 3.3 J.IIIlIIIIIlI
Feb 4.31 4.04 0.27 2.8
Mar 4.38 4.14 0.23 Jun05 Jul Aug Sep Oct Nov Dec Jan06 Feb Mar Apr May
Apr 4.47 4.30 0.17
May 4.62 4.56 0.05 ■ LAIF Yield ■ City Yield
* Standard and Poors
** LAIF, and City Loan to RDA Page 2 of 8
City of Palm Desert
Portfolio Holdings
31 May 2006
Market I Ratings
I Par Value I Issuer 'Coupon' Maturity I Cost I YTM I Price I Value I Moody's' S&P
Medium -Term Notes
$ 3,000,000 BANK ONE 4.13 9/1/07 $ 3,017,153 3.64 98.16 $ 2,944,827 Aa3 A+
$ 3,000,000 FORD MOTOR CREDIT CORP 7.20 6/15/07 $ 3,039,717 5.75 99.45 $ 2,983,467 Ba2 BB-
$ 2,500,000 FORD MOTOR CREDIT CORP 7.20 6/15/07 $ 2,533,097 5.75 99.45 $ 2,486,222 Ba2 BB-
$ 4,612,000 FORD MOTOR CREDIT CORP 7.20 6/15/07 $ 4,705,453 5.10 99.45 $ 4,586,583 Ba2 BB-
$ 2,000,000 GENERAL ELECTRIC 3.13 11/9/06 $ 1,993,247 3.92 99.05 $ 1,980,932 Aaa AAA
$ 2,000,000 GENERAL ELECTRIC 3.60 10/15/08 $ 1,938,891 4.99 95.86 $ 1,917,258 Aaa AAA
$ 3,000,000 GOLDMAN SACHS 7.20 3/1/07 $ 3,079,541 3.50 101.24 $ 3,037,224 Aa3 A+
$ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,112,766 4.93 103.93 $ 2,078,632 Aa2 AA
$ 22,112,000 Subtotal $ 22,419,865 4.72 $ 22,015,146
Federal Agencies - Coupon
$ 3,000,000 FED HOME LOAN BANK 3.70 8/15/07 $ 2,996,815 3.79 98.09 $ 2,942,813 Aaa AAA
$ 1,500,000 FED HOME LOAN BANK 2.10 10/13/06 $ 1,491,002 3.79 98.88 $ 1,483,125 Aaa AAA
- $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,955,675 5.59 97.16 $ 2,914,688 Aaa AAA
$ 1,980,000 FED HOME LOAN BANK 4.75 12/12/08 $ 1,973,729 4.87 98.66 $ 1,953,394 Aaa AAA
$ 3,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 2,984,494 5.40 98.50 $ 2,955,000 Aaa AAA
- $ 2,049,000 FED HOME LOAN BANK 4.00 12/15/09 $ 1,992,241 4.87 95.72 $ 1,961,277 Aaa AAA
$ 2,035,000 FED HOME LOAN MTG CORP 2.50 12/4/06 $ 2,021,631 3.84 98.56 $ 2,005,747 Aaa AAA
$ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 1,997,163 4.87 96.91 $ 1,970,104 Aaa AAA
$ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,952,632 4.88 96.20 $ 1,924,074 Aaa AAA
$ 2,000,000 FED HOME LOAN MTG CORP 4.90 11/3/08 $ 1,992,807 5.06 98.62 $ 1,972,408 Aaa AAA
$ 2,786,000 FED NATIONAL MTG ASSOC 7.13 3/15/07 $ 2,861,369 3.55 101.34 $ 2,823,437 Aaa AAA
$ 3,000,000 FED NATIONAL MTG ASSOC 3.00 8/15/07 $ 2,978,754 3.63 97.28 $ 2,918,438 Aaa AAA
$ 3,000,000 FED NATIONAL MTG ASSOC 2.75 8/11/06 $ 2,993,966 3.81 99.53 $ 2,985,938 Aaa AAA
$ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,984,141 4.88 97.81 $ 1,956,250 Aaa AAA
i $ 33,383,000 Subtotal $ 33,176,418 4.46 $ 32,766,691
Federal Agencies -- Callable
$ 2,000,000 FED HOME LOAN BANK 4.20 7/18/08 $ 1,973,033 4.88 97.75 $ 1,955,000 Aaa AAA
$ 2,000,000 FED HOME LOAN MTG CORP 5.05 8/22/08 $ 1,999,444 5.06 99.35 $ 1,987,016 Aaa AAA
$ 4,000,000 Subtotal $ 3,972,477 4.97 $ 3,942,016 I
Local Government Investment Pool
$ 27,724,344 L.A.I,F. 0.00 6/1/06 $ 27,724,344 4.56 100.00 $ 27,724,344 U U
I $ 27,724,344 Subtotal $ 27,724,344 4.56 $ 27,724,344
Local Government Investment Pool
$ 10,623,081 C.A.M.P. 0.00 6/1/06 $ 10,623,081 4.86 100.00 $ 10,623,081 U
I $ 10,623,081 Subtotal $ 10,623,081 4.86 $ 10,623,081
AAA
I
"U" = Unrated Page 3 of 8
I Par Value
Money Market Fund
I$
Issuer
City of Palm Desert
Portfolio Holdings
31 May 2006
Market I Ratings
'Coupon' Maturity I Cost I YTM I Price I Value I Moody's' S&P
7,972,187 WF ADVANTAGE GOUT 0.00 6/1/06 $ 7,972,187 4.89 100.00 $ 7,972,187 Aaa AAA
7,972,187 Subtotal $ 7,972,187 4.89 $ 7,972,187
City Loan to RDA
$ 32,785,480 CITY OF PALM DESERT
$ 32,785,480 Subtotal
0.00 6/1/36 $ 32,785,480 4.56 100.00 $ 32,785,480 U U
$ 32,785,480 4.56 $ 32,785,480
Total Investments
$ 138,600,092 $ 138,673,852 4.62 $ 137,828,944
Cash
$ 39,545,270 CITY MAIN CHKG 0.00 6/1/06 $ 39,545,270 0.00 100.00 $ 39,545,270 N/A N/A
- $ 427,766 DESERT WILLOW CHKG 0.00 6/1/06 $ 427,766 0.00 100.00 $ 427,766 N/A N/A
$ 626,584 MONTEREY 170 CHKG 0.00 6/1/06 $ 626,584 0.00 100.00 $ 626,584 N/A NIA
$ 433,832 RECREATIONAL FAC CHKG 0.00 6/1/06 $ 433,832 0.00 100.00 $ 433,832 N/A N/A
$ 41,033,451 Subtotal $ 41,033,451 $ 41,033,451
Total Investments and Cash
$ 179, 633, 543
$ 179,707,303 $ 178,862,395
"U" = Unrated Page 4 of 8
Dollars in Thousands
Ageing Interval
<1M
< 2M
< 3M
< 6M
< 1YR
< 2YR
< 3YR
< 4YR
< 5YR
> 5YR
Total:
Palm Desert Redevelopment Agency -- Portfolio Characteristics
31 May 2006
Market Value
$ 47,987
2,980
1,978
5,876
14,239
12,778
12,855
$ 98,693
Quality* Market Value
AAA $ 78,126
AA $ 1,937
A $ 2,017
Unrated ** 50,443
BB- 2,998
Total: $ 135,521
Sector Market Value
LAIF $ 50,443
MMFs 24,426
Agencies 53,701
MTNs 6,951
CP -
Treasuries
Total: $ 135,521
Month RDA Yield LAIF Yield Variance
Jun05 3.09 2.97 0.13
Jul 3.21 3.08 0.13
Aug 3.32 3.18 0.14
Sep 3.42 3.32 0.10
Oct 3.54 3.46 0.08
Nov 3.68 3.64 0.04
Dec 3.82 3.81 0.01
Jan06 3.99 3.96 0.03
Feb 4.26 4.04 0.22
Mar 4.38 4.14 0.24
Apr 4.50 4.30 0.20
May 4.60 4.56 0.04
Portfolio Ageing w/o SLGSsI
100
90
80
70
0 60 49
50
I40
a30
20
10
0
0
14 13 13
3 2 6 n n n
f'--1
< 1 M < 2M < 3M < 6M < 1YR < 2YR < 3YR < 4YR
Credit Quality'
AAA
59%
BB-
2%
Asset Allocation'
LAIF
37%
AA
1%
A
1%
Unrated *"
37%
MMFs
18%
Agencies
MTNs ' / 40%
5%
Performance
4.8
4.3
70 3.8
3.3 111111111111111
2.8
Jun05 Jul Aug Sep Oct Nov Dec Jan06 Feb Mar Apr May
■ LAIF Yield ■ RDA Yield
* Standard and Poors
** LAIF Page 5 of 8
Palm Desert Redevelopment Agency
Portfolio Holdings
31 May 2006
Market I Ratings
I Par Value I Issuer I Coupon' Maturity I Cost I YTM Price I Value Moody's' S&P
Medium -Term Notes
$ 3,000,000 FORD MOTOR CREDIT CORP 6.50 1/25/07 $ 3,030,232 4.85 99.94 $ 2,998,287 Ba2 BB-
$ 2,000,000 FIRST UNION NAT BANK 5.80 12/1/08 $ 2,036,741 5.00 100.83 $ 2,016,506 Aa3 A+
$ 2,000,000 WELLS FARGO BANK 4.00 8/15/08 $ 1,960,607 4.96 96.83 $ 1,936,568 Aa1 AA -
I $ 7,000,000 Subtotal $ 7,027,579 4.93 $ 6,951,361
Federal Agency - Coupon
$ 3,000,000 FED FARM CREDIT BANK 2.63 9/17/07 $ 2,969,964 3.43 96.69 $ 2,900,625 Aaa AAA
$ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,095,090 4.88 103.35 $ 2,067,026 Aaa AAA
$ 2,000,000 FED FARM CREDIT BANK 3.63 10/24/08 $ 1,943,907 4.89 96.22 $ 1,924,375 Aaa AAA
$ 2,000,000 FED FARM CREDIT BANK 4.75 8/3/09 $ 1,993,048 4.87 98.50 $ 1,970,000 Aaa AAA
$ 3,000,000 FED HOME LOAN BANK 3.38 9/14/07 $ 2,996,454 3.82 97.66 $ 2,929,688 Aaa AAA
$ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,918,377 4.79 97.72 $ 3,879,434 Aaa AAA
$ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,918,377 4.79 97.72 $ 3,879,434 Aaa AAA
$ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,433,512 5.59 97.16 $ 4,372,031 Aaa AAA
$ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,914,502 4.88 94.22 $ 1,884,375 Aaa AAA
$ 4,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 3,979,326 4.84 98.50 $ 3,940,000 Aaa AAA
$ 2,005,000 FED HOME LOAN BANK 3.88 7/24/09 $ 1,946,750 4.89 95.75 $ 1,919,788 Aaa AAA
$ 3,000,000 FED HOME LOAN MTG CORP 4.88 3/15/07 $ 3,033,797 3.38 99.63 $ 2,988,750 Aaa AAA
$ 2,974,000 FED HOME LOAN MTG CORP 3.63 9/15/06 $ 2,974,254 3.60 99.53 $ 2,960,059 Aaa AAA
$ 2,974,000 FED HOME LOAN MTG CORP 3.63 9/15/06 $ 2,974,301 3.60 99.53 $ 2,960,059 Aaa AAA
$ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 1,992,045 4.87 95.72 $ 1,961,277 Aaa AAA
$ 2,000,000 FED HOME LOAN MTG CORP 5.00 7/23/08 $ 1,997,274 5.07 99.20 $ 1,984,016 Aaa AAA
$ 2,973,000 FED NATIONAL MTG ASSOC 3.63 3/15/07 $ 2,974,641 3.95 98.66 $ 2,933,050 Aaa AAA
$ 4,155,000 FED NATIONAL MTG ASSOC 6.63 9/15/09 $ 4,369,612 4.89 103.84 $ 4,314,708 Aaa AAA
$ 2,000,000 FED NATIONAL MTG ASSOC 3.88 11/17/08 $ 1,954,591 4.87 96.56 $ 1,931,250 Aaa AAA
i $ 54,570,000 Subtotal $ 54,379,821 4.52 $ 53,699,946
Local Government Investment Pools
$ 30,072,381 L.A.I.F. 0.00 6/1/06 $ 30,072,381 4.56 100.00 $ 30,072,381 U U
$ 5,960,895 L.A.I.F. (HOUSING) 0.00 6/1/06 $ 5,960,895 4.56 100.00 $ 5,960,895 U U
$ 496,303 L.A.I.F. BOND PROCEEDS 0.00 6/1/06 $ 496,303 4.56 100.00 $ 496,303 U U
$ 13,913,883 L.A.I.F. BOND PROCEEDS 0.00 6/1/06 $ 13,913,883 4.56 100.00 $ 13,913,883 U U
I $ 50,443,462 Subtotal $ 50,443,462 4.56 $ 50,443,462
Local Government Investment Pool
$ 8,501,809 C.A.M.P. 0.00 6/1/06 $ 8,501,809 4.86 100.00 $ 8,501,809 U AAA
I $ 8,501,809 Subtotal $ 8,501,809 4.86 $ 8,501,809
Money Market Fund
$ 15,924,163 WF ADVANTAGE GOVT 0.00 6/1/06 $ 15,924,163 4.89 100.00 $ 15,924,163 Aaa AAA
I $ 15,924,163 Subtotal $ 15,924,163 4.89 $ 15,924,163
1
"U" = Unrated Page 6 of 8
Palm Desert Redevelopment Agency
Portfolio Holdings
31 May 2006
Market I Ratings
I Par Value I Issuer 'Coupon' Maturity I Cost I YTM I Price I Value I Moody'sI S&P
Total Investments
$ 136,439,434
$ 136,276,835 4.62 $ 135,520,741
Cash
$ 854,993 HOUSING AUTH CHKG 0.00 6/1/06 $ 854,993 0.00 100.00 $ 854,993 N/A N/A
$ 324,119 HOUSING AUTH TRUST 0.00 6/1/06 $ 324,119 0.00 100.00 $ 324,119 N/A N/A
I $ 1,179,113 Subtotal $ 1,179,113 $ 1,179,113
Total Investments and Cash
$ 137,618,547
Corporate Issuers
FORD MOTOR CREDIT CORPORATION
FIRST UNION NAT BANK
WELLS FARGO BANK
$ 137,455,948 $ 136,699,854
% of Portfolio
(Market Value)
2.19%
1.48%
1.42%
"U" = Unrated Page 7 of 8
STATEMENT OF COMPLIANCE
The investment portfolios of the City of Palm Desert ("City") and the Palm Desert Redevelopment Agency ("RDA") are
governed by federal, state, and local law. The City Treasurer's "Statement of Investment Policy" is more restrictive than the
California Govemment Code. The Palm Desert Investment Committee and the Palm Desert City Council review the
Statement of Investment Policy annually.
For the month ended 31 May 2006, the City and the RDA investment portfolios were in compliance with all applicable
federal, state, and local laws and regulations. The City Treasury continued to pursue conservative and prudent investment
strategies, based upon the stated objectives of safety, liquidity, and yield (in order of priority).
Barring unforeseen events, the City Treasury should have sufficient cash to finance the operations of the City of Palm Desert
and the Palm Desert Redevelopment Agency over the next six months. In addition, portions of either the City or the RDA
portfolio could be liquidated in order to meet any significant, unexpected cash requirements.
Bloomberg L.P. and Interactive Data Corporation provided the data and the analytical tools that were used to calculate the
market value of all securities in the City and the RDA investment portfolios. State and Local Government Series securities
are held in escrow accounts and are therefore not included in this report as assets. All balances are bank balances.
Respectfully submitted on 27 June 2006,
PauLS. Qi on C.C.Af. T
City Treasurer
CA Govt
Code Investment Category
53601(a) Palm Desert Bonds
53601(b) U.S. Treasuries
53601(c) CA State Debt
53601(d) CA Local Agency Debt
53601(e) Federal Agencies
53601(f) Bankers's Acceptances
53601(g) Commercial Paper
53601(h) Negotiable CDs
536010) Repos
53601(i) Reverse Repos
53601(j) Medium -Term Notes
53601(k) Mutual Funds
53601(1) Trust Indenture Debt
53601(m) Secured Bank Deposits
53601(k) Local Government
Investment Pools
53601(n) Mortgage -Backed
Securities
LAi F
SUMMARY OF AUTHORIZED INVESTMENTS
California Government Code
Maximum Maximum Quality Maximum
Maturity Limit S&P/Mdys Maturity
5 Years No Limit
5 Years No Limit
5 Years No Limit
5 Years No Limit
5 Years No Limit
180 Days 40%
270 Days 25%
5 Years 30%
1 Year No Limit
92 Days 20%
5 Years 30%
90 Days 20%
5 Years No Limit
90 Days 20%
5 Years 20%
AAA & Aaa
or Advisor
A (Issuer) &
AA (Security
City Investment Policy
Not Authorized (1)
5 Years I No Limit I I 0.0%
Not Authorized
Not Authorized
5 Years 30% 6% 26.8%. 39.9%
180 Days 40% A-1 & P-1
A-1+ or P-1 270 Days 25% A-1+ or P-1 0.0% 0.0%
5 Years 30% AA- or Aa3
30 Days 20% AAA & Aaa
Not Authorized
A 5 Years I 30%A I 16.2%
AAA & Aaa 90 Days 20% (2) AAA & Aaa 5.8%
Not Authorized
Not Authorized
I I AAA & Aaa
90 Days 20% (2) or Advisor 7.7%
Not Authorized
Maximum Quality % of City % of RDA
Limit S&P/Mdys Portfolio Portfolio
0.0%
No Limit I No Limit
(1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council.
(2) Maximum limit for mutual funds and local govemment investment pools, excluding bond proceeds.
I 20.0% I
76.4%
5.2%
11.7%
6.2%
37.0%
100.0%
* Certified California Municipal Treasurer Page 8 of 8