HomeMy WebLinkAboutCompliance Analysis Investment Reports - May 2005�C-
CITY OF PALM DESERT
FINANCE DEPARTMENT
INTEROFFICE MEMORANDUM
TO: RACHELLE KLASSEN, CITY CLERK
FROM: NIAMH ORTEGA, RECORDING SECRETARY "
DATE: JULY 5, 2005
SUBJECT: COMPLIANCE ANALYSIS AND INVESTMENT REPORTS
Please find attached the Compliance Analysis and Investment Reports for May 2005
which were presented and approved at the meeting of June 22, 2005. 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)
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COMPLI'i�iNCE �►NA YS S aT�D IINVE$TM15t4t 06",t
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 on June 30th to review short-term interest rates. It is expected that
the FOMC will raise the Federal Funds Rate 25 basis points to 3.25 percent -- the ninth consecutive rate increase. Despite
press statements to the contrary, Chairman Greenspan has indicated that the FOMC will continue to raise short-term interest
rates. He is increasingly concerned about a "bubble" in the real estate market, especially with interest -only floating rate loans
becoming the dominant form of home financing. Creative financing usually signifies the end of a housing cycle.
The yield curve continues to flatten, with 10-Year U.S. Treasury Notes yielding below 4.00 percent. For the first time in recent
economic history, there appears to be a disconnect between short-term and long-term interest rates. Usually, for every two
basis points that short-term rates rise, long-term rates rise by one basis point. This is not happening, however.
The City Treasurer's Office recently invested $30 million of property taxes through competitive bidding. The results were quite
interesting. The regional brokers, Wells Fargo Bank and Zions Bank, sold seven of the 11 securities that the City bought. Both
banks had ample inventories of Agencies, and some corporates as well. The primary dealers, Citigroup and Merrill Lynch, in
contrast, often had little inventory for the dates that the City required. In a complete surprise, Zions was the most price
competitive, and sold the greatest number of securities to the City (four). Zions just missed selling another two to the City.
Pis o�jdij�, c.C..A r.
Treasurer
PORTFOLIO STATISTICS
Dollars in Thousands
MAY-05 APR-05 MAR-05 FEB-05 JAN-05 DEC-04
CITY
Month -End Book Value—
$
172,413
$
145,753
$
146,856
$
142,687
$
140,218
$ 124,724
Month -End Market Value—
$
172,196
$
145,498
$
146,787
$
142,852
$
140,446
$ 124,992
Paper Gain (Loss)
$
(217)
$
(255)
$
(69)
$
165
$
228
$ 268
Prior Year Book Variance
$
46,510
$
15,413
$
20,165
$
17,749
$
12,381
$ (8,112)
Interest Earnings
$
359
$
321
$
325
$
283
$
243
$ 222
Yield -To -Maturity
3.06%
2.94%
2.79%
2.66%
2.54%
2.26%
Weighted Maturity (Days)
134
166
170
172
178
121
Effective Duration
0.21
0.25
0.28
0.30
0.32
0.14
RDA
Month -End Book Value """
$
124,373
$
125,433
$
158,324
$
159,105
$
160,560
$ 147,802
Month -End Market Value """
$
124,233
$
125,251
$
158,129
$
159,134
$
160,623
$ 147,862
Paper Gain (Loss)
$
(140)
$
(182)
$
(195)
$
29
$
63
$ 60
Prior Year Book Variance
$
(52,270)
$
(27,263)
$
(5,191)
$
(5,466)
$
(2,570)
$ 6,079
Interest Earnings
$
302
$
286
$
375
$
285
$
268
$ 239
Yield -To -Maturity
2.93%
2.80%
2.58%
2.37%
2.23%
2.00%
Weighted Maturity (Days)
101
101
80
136
127
65
Effective Duration
0.21
0.22
0.18
0.20
0.20
0.05
4' """ Omits SLGSs.
City of Palm Desert -- Portfolio Characteristics
31 May 2005
Dollars in Thousands
Ageinq Interval
Market Value
General Fund AgeingM
< 1 M
$ 104,503
< 2M
2,989
< 3M
2,977
100
< 6M
5,933
80
80 -
< 1YR
3,000
0
< 2YR
3,156
0 60 -
< 3YR
8,505
0
E 40 -
< 4YR
-
a0
< 5YR
_
20
5 6
> 5YR
-
?
? ^ 2 I7-1
0
Total:
$ 131,063
< 1 M < 2M
< 3M < 6M < 1 YR < 2YR < 3YR
Ratings
Market Value
Credit Quality
AAA
AAA
$ 64,565
39%
Unrated '"
72,786
BB+ Unrated
AA
6,167
6% 44%
A-1
12,014
A-1
BB+
10,102
7%
Total:
$ 165,634
AA
4%
Sector
Market Value
MMFs
$ 18,589
LAIF
40,000
RDA Loan
32,785
MTNs
16,269
Agencies
45,977
CP
12,014
Total:
$ 165,634
Month
Citv Yield
LAIF Yield
Jun04
1.58
1.47
Jul
1.68
1.60
Aug
1.74
1.67
Sep
1.84
1.77
Oct
1.96
1.89
Nov
2.08
2.00
Dec
2.26
2.20
Jan05
2.54
2.26
Feb
2.66
2.37
Mar
2.79
2.54
Apr
2.94
2.72
May
3.06
2.86
Asset AllocationN
Variance
�Performance�
0.11
0.07
3.2
0.06
0.07
0.07
0 2.6
0.08�-,
0.06
> 2.0
0.28
0.29 1.4
0.25 Jun04 Jul Aug Sep Oct Nov DecJan05 Feb Mar Apr May
0.21
0.21 0LAIF Y eld ■C ty Yield
\
RDA Loan
20%
�.
MTNs
LAIF
10%
24%
MMFs A.
Agencies
11 % CID
28%
7%
i
Standard and Poors
LAIF, and City Loan to RDA Page 2 of 8
City of Palm Desert
Portfolio Holdings
31 May 2005
Market
Par Value Issuer Coupon I Maturity Cost YTM I Price I Value
Medium -Term Notes
$
3,000,000
BANK ONE
4.13
$
3,000,000
FORD MOTOR CREDIT CORP
7.20
$
2,500,000
FORD MOTOR CREDIT CORP
7.20
$
4,612,000
FORD MOTOR CREDIT CORP
7.20
$
3,000,000
GOLDMAN SACHS
7.20
1 $ 16,112,000 Subtotal
Commercial Paper -- Discount
$
3,000,000
GENERAL ELECTRIC
2.63
$
3,000,000
GENERAL ELECTRIC
2.71
$
5,050,000
GENERAL ELECTRIC
2.73
$
1,000,000
GENERAL ELECTRIC
3.29
$
12,050,000
Subtotal
Federal Agencies -- Discount
$
2,060,000
FED HOME LOAN BANK
3.41
$
30,000,000
FED HOME LOAN BANK
2.89
$
2,000,000
FED HOME LOAN MTG CORP
3.13
$
5,047,000
FED NATIONAL MTG ASSOC
2.71
$
3,000,000
FED NATIONAL MTG ASSOC
3.13
$
3,000,000
FED NATIONAL MTG ASSOC
3.09
$
1,023,000
FED NATIONAL MTG ASSOC
3.36
$
46,130,000
Subtotal
LGIP
$
40,000,000
L.A.I.F.
0.00
$
40,000,000
Subtotal
LGIP
$
11,297,994
C.A.M.P.
0.00
$
11,297,994
Subtotal
LGIP
$
9,106,962
AIM
0.00
$
9,106,962
Subtotal
City Loan to RDA
$ 32,785,480 CITY OF PALM DESERT
$ 32,785,480 Subtotal
Ratings
Moody's I S&P
1-Sep-07
$
3,030,875
3.64
100.57
$
3,017,097
Aa3
A+
15-Jun-07
$
3,077,947
5.75
99.90
$
2,996,985
Baa2
BB+
15-Jun-07
$
2,564,956
5.75
99.90
$
2,497,488
Baa2
BB+
15-Jun-07
$
4,795,408
5.10
99.90
$
4,607,365
Baa2
BB+
1-Mar-07
$
3,185,596
3.50
105.01
$
3,150,213
Aa3
A+
$
16,654,782
4.75
$
16,269,148
15-Jun-05
$
2,968,221
2.70
99.90
$
2,997,000
P-1
A-1+
15-Jul-05
$
2,960,479
2.78
99.62
$
2,988,730
P-1
A-1+
22-Jun-05
$
4,999,067
2.80
99.81
$
5,040,340
P-1
A-1+
7-Oct-05
$
987,206
3.38
98.80
$
987,996
P-1
A-1+
$
11,914,972
2.82
$
12,014,066
20-Mar-06
$
2,000,681
3.59
97.15
$
2,001,290
Aaa
AAA
1-Jun-05
$
29,985,550
2.93
100.00
$
30,000,000
Aaa
AAA
15-Sep-05
$
1,978,786
3.21
99.07
$
1,981,400
Aaa
AAA
15-Jun-05
$
4,999,129
2.77
99.88
$
5,040,944
Aaa
AAA
19-Sep-05
$
2,967,135
3.21
99.03
$
2,970,900
Aaa
AAA
10-Aug-05
$
2,977,045
3.16
99.40
$
2,982,000
Aaa
AAA
18-Jan-06
$
999,798
3.54
97.81
$
1,000,596
Aaa
AAA
$
46,130,000
3.00
$
45,977,130
1-Jun-06
$
40,000,000
2.86
100.00
$
40,000,000
U
U
$
40,000,000
2.86
$
40,000,000
1-Jun-05
$
9,480,881
2.72
100.00
$
9,480,881
U
AAA
$
9,480,881
2.72
$
9,480,881
1-Jun-05
$
9,106,962
2.64
100.00
$
9,106,962
Aaa
AAA
$
9,106,962
2.64
$
9,106,962
0.00 1-Jun-06 $ 32,785,480 2.86 100.00 $ 32,785,480 U U
$ 32,785,480 2.86 $ 32,785,480 1
'U° = Unrated Page 3 of 8
City of Palm Desert
Portfolio Holdings
31 May 2005
Market Ratings
Par Value Issuer Coupon I Maturity Cost YTM I Price Value I Moody's I S&P
Total Investments
$ 167,482,436
$
166,073,077
3.06
$
165,633,667
Cash
$ 4,555,088
CITY MAIN CHKG
0.00 1-Jun-05 $
4,555,088
0.00
100.00 $
4,555,088 N/A
$ 1,356,965
DESERT WILLOW CHKG
0.00 1-Jun-05 $
1,356,965
0.00
100.00 $
1,356,965 N/A
$ 650,233
RECREATIONAL FAC CHKG
0.00 1-Jun-05 $
650,233
0.00
100.00 $
650,233 N/A
$ 6,562,286
Subtotal
$
6,562,286
$
6,562,286
Total Cash and Investments
$ 174,044,722
$
172,635,363
$
172,195,953
Corporate Issuers
GENERAL ELECTRIC CAPITAL CORPORATION
FORD MOTOR CREDIT CORPORATION
GOLDMAN SACHS
BANK ONE
% of Portfolio
(Market Value)
6.98%
5.87%
1.83%
1.75%
N/A
N/A
N/A
"U" = Unrated Page 4 of 8
Palm Desert Redevelopment Agency - Portfolio Characteristics
31 May 2005
Dollars in Thousands
Aaeina Interval
Market Value
< 1 M
$ 62,968
<2M
-
< 3M
2,972
< 6M
-
< 1YR
3,566
< 2YR
6,054
< 3YR
5,878
< 4YR
-
< 5YR
-
> 5YR
-
Total:
$ 81,438
Quality
Market Value
AAA
$ 51,634
Unrated "
60,913
A-1
2,979
BB+
6,569
Total:
$ 122,095
Sector
Market Value
LAIF
$ 60,913
MMFs
42,681
Agencies
8,953
CID
2,979
MTNs
6,569
Treasuries
-
Total:
$ 122,095
Month RDA Yield
LAIF Yield
Jun04
1.37
1.47
Jul
1.53
1.60
Aug
1.51
1.67
Sep
1.61
1.77
Oct
1.73
1.89
Nov
1.84
2.00
Dec
2.00
2.20
Jan05
2.23
2.26
Feb
2.37
2.37
Mar
2.58
2.54
Apr
2.80
2.72
May
2.93
2.86
i 1
Portfolio Ageing w/o SLGSs�
100
90 77
80
0 70
c 60
0 50 -
t- 40 -
a° 30 -
20
10 0 ^ 0 ^ f� n 0
< 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR
Credit Quality '
Asset Allocation
I
Variance
Performance
-0.10
-0.08
3.1
-0.16
-0.17
-0.1 6
0 2.5
-0.17
2
-0.20
} 1.9
-0.03
0.00 1.3
0.04 Jun04 Jul Aug Sep Oct Nov DecJan05 Feb Mar Apr May
0.08
0.07 IN LAIF Yield MR DA Yield
AAA Unrated "
42% 51%
BB+
5% A-1
2%
LAIF MMFs
51 % 35%
MTNs,
5% CP
2% Agencies
7%
i
' Standard and Poors
"' LAIF Page 5 of 8
Palm Desert Redevelopment Agency
Portfolio Holdings
31 May 2005
Market
Ratings
Par Value
Issuer
lCouponj
Maturity
I
Cost
I YTM
Price I
Value
Moody'si
S&P
Medium -Term Notes
$ 3,000,000
FORD MOTOR CREDIT CORP
6.50
25-Jan-07
$
3,076,742
4.85
100.16
$ 3,004,869
Baa2
BB+
$ 3,525,000
FORD MOTOR CREDIT CORP
6.88
1-Feb-06
$
3,591,873
3.94
101.12
$ 3,564,618
Baa2
BB+
$ 6,525,000
Subtotal
$
6,668,615
4.36
$ 6,569,486
Commercial Paper - Discount
$ 3,000,000
GENERAL ELECTRIC
2.77
15-Aug-05
$
2,952,448
2.87
99.31
$ 2,979,163
P-1
A-1+
$ 3,000,000
Subtotal
$
2,952,448
2.87
$ 2,979,163
Federal Agency
- Coupon
$ 3,000,000
FED FARM CREDIT BANK
2.63
17-Sep-07
$
2,946,760
3.43
97.41
$ 2,922,188
Aaa
AAA
$ 3,000,000
FED HOME LOAN BANK
3.38
14-Sep-07
$
2,993,696
3.82
99.13
$ 2,973,750
Aaa
AAA
$ 3,000,000
FED HOME LOAN MTG CORP
4.88
15-Mar-07
$
3,076,639
3.38
101.91
$ 3,057,188
Aaa
AAA
Is 9,000,000
Subtotal
$
9,017,095
3.54
$ 8,953,125
LGIP
$ 40,000,000
L.A.I.F.
0.00
1-Jun-05
$
40,000,000
2.86
100.00
$ 40,000,000
U
U
$ 5,761,496
L.A.I.F. (HOUSING)
0.00
1-Jun-05
$
5,761,496
2.86
100.00
$ 5,761,496
U
U
$ 5,151,818
L.A.I.F. BOND PROCEEDS
0.00
1-Jun-05
$
5,151,818
2.86
100.00
$ 5,151,818
U
U
$ 9,999,673
L.A.I.F. BOND PROCEEDS
0.00
1-Jun-05
$
9,999,673
2.86
100.00
$ 9,999,673
U
U
$ 60,912,987
Subtotal
$
60,912,987
2.86
$ 60,912,987
LGIP
$ 17,615,287
C.A.M.P.
0.00
1-Jun-05
$
17,615,287
2.72
100.00
$ 17,615,287
U
AAA
$ 17,615,287
Subtotal
$
17,615,287
2.72
$ 17,615,287
LGIP
$ 25,065,137
AIM
0.00
1-Jun-05
$
25,065,137
2.64
100.00
$ 25,065,137
Aaa
AAA
$ 25,065,137
Subtotal
$
25,065,137
2.64
$ 25,065,137
Total Investments
$ 122,118,411
$
122,231,569
2.93
$ 122,095,185
Cash
$ 1,818,964
HOUSING AUTH CHKG
0.00
1-Jun-05
$
1,818,964
0.00
100.00
$ 1,818,964
N/A
N/A
$ 319,096
HOUSING AUTH TRUST
0.00
1-Jun-05
$
319,096
0.00
100.00
$ 319,096
N/A
N/A
$ 2,138,060
Subtotal
$
2,138,060
$ 2,138,060
"U" = Unrated
Page 6 of 8
I Par Value
Total Cash and Investments
$ 124,256,470
Palm Desert Redevelopment Agency
Portfolio Holdings
31 May 2005
Issuer lCouponj Maturity
Corporate Issuers
FORD MOTOR CREDIT CORPORATION
GENERAL ELECTRIC CAPITAL CORPORATION
Market
Cost YTM I Price I Value
$ 124,369,629 $ 124,233,245
% of Portfolio
(Market Value)
5.29%
2.40%
Ratings
Moody'sl S&P'
"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 Government 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 2005, 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 22 June 2005,
/Pau,iV i i7a4&sz C.C. M. T. "
City Treasurer
SUMMARY OF AUTHORIZED INVESTMENTS
I California Government Code I City Investment Policy
CA Govt
Maximum
Maximum
Quality
Maximum
Maximum Quality % of City % of RDA
Code
Investment Category
Maturity
Limit
S&P/Mdys
Maturity
Limit
S&P/Mdys
Portfolio Portfolio
53601(a)
Palm Desert Bonds
5 Years
No Limit
Not Authorized (1)
53601(b)
U.S. Treasuries
5'V'ears
No Limit
5 Years
No Limit
0.0% 0.0%
53601(c)
CA State Debt
5 Years
No Limit
Not Authorized
53601(d)
CA Local Agency Debt
5 Years
No Limit
Not Authorized
53601(e)
Federal Agencies
p 6Years
No Limit
5 Years
30%
6%
7% 7.4%
27.-
53601(f)
Bankers's Acceptances
180 Days
40%
180 Days
40%
A-1 & P-1 I
-
53601(q)
Comrtt"-rcial Papar`
270 Days
25%
A-1+ or P-1
270 Days
25%
A-1+ or P-1
7.2% 2.4%
53601(h)
Negotiable CDs
5 Years
30%
5 Years
30%
AA- or Aaa
- -
53601(i)
Repos
1 Year
No Limit
30 Days
20%
AAA & Aaa
- - -
53601(i)
Reverse Repos
92 Days
20%
Not Authorized
536010)
Medium-TermNofes
5 Years
30%
A
5 Years
30%
A
10.0%
5.5%
53601(k)
Mutual Funds
90 Days
20%
AAA & Aaa
. 90 Days
20% (2)
I AAA & Aaal
5.5%
I 20.5%
53601(I)
Trust Indenture Debt
Not Authorized
53601(m)
Secured Bank Deposits
5 Years
No Limit
Not Authorized
53601(k)
Local Government
AAA & Aaa
= . •_
AAA & Aaa
5.7%
14.4%
Investment Pools
90 Days
20%
or Advisor
90 Days
20% (2)
I or Advisor I
I
53601(n)
Mortgage -Backed
5 Years
20%
A (Issuer) &
Not Authorized
Securities AA (Security,
LAW '_ No Limit 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 government investment pools, excluding bond proceeds.
24.1 % I 49.8%
80.2% 100.0%
' Certified California Municipal Treasurer Page 8 of 8