HomeMy WebLinkAboutCompliance Analysis and Investment Reports - January 2005CITY OF PALM DESERT
FINANCE DEPARTMENT
INTEROFFICE MEMORANDUM
TO: RACHELLE KLASSEN, CITY CLERK
FROM: NIAMH ORTEGA, RECORDING SECRETARY`�`MS�
DATE: FEBRUARY 23, 2005
SUBJECT: COMPLIANCE ANALYSIS AND INVESTMENT REPORTS
Please find attached the Compliance Analysis and Investment Reports for January
2005 which were presented and approved at the meeting of February 23, 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)
G:\Finance\Niamh Ortega\Wpdocs\Investment Committee\Memoslrklasseninvreport012605.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) met on February 2nd, and raised the Federal Funds Rate by 25 basis points to
2.50%. The FOMC said that it would continue to raise short-term interest rates at a "measured pace." The FOMC stated
that economic growth was "moderate," the job market was improving "gradually," and inflation remained "well -contained."
Although there had been some concern about signs of inflation in December, that was apparently no longer the case.
Unless there are significant shifts in the economy, investors expect the Federal Funds Rate to rise to 2.75% at the March 22nd
FOMC meeting; to 3.0% at the May 3rd meeting; and to 3.50% by year-end. Chairman Greenspan reportedly wants to ensure
that when he leaves his post next year, his successor will have the ability to reverse course, and cut rates should the economy
go into decline.
The yield curve continues to flatten, with short- and intermediate -term interest rates rising modestly, and long-term interest
rates declining slightly. The decline in Tong -term rates reflects the perception that the long-term inflation outlook remains under
control. As a Wells Fargo investment letter recently noted, the "barbell" investment strategy that the City used to invest its
property taxes in January, is becoming increasingly popular since it can provide a performance advantage when the yield curve
is flattening.
PauLS. Qt on C c.M
Treasurer
Dollars in Thousands
PORTFOLIO STATISTICS
JAN-05 DEC-04 NOV-04 OCT-04 SEP-04 AUG-04
CITY
Month -End Book Value*** $ 140,218 $ 124,724 $ 128,602 $ 130,550 $ 132,121 $ 136,973
Month -End Market Value*** $ 140,446 $ 124,992 $ 128,877 $ 130,866 $ 132,403 $ 137,299
Paper Gain (Loss) $ 228 $ 268 $ 275 $ 316 $ 282 $ 326
Prior Year Book Variance $ 12,381 $ (8,112) $ (3,536) $ (3,592) $ (6,242) $ (48,236)
Interest Earnings $ 243 $ 222 $ 214 $ 200 $ 191 $ 195
Yield -To -Maturity 2.54% 2.26% 2.08% 1.96% 1.84% 1.74%
Weighted Maturity (Days) 178 121 119 124 123 121
Effective Duration 0.32 0.14 0.15 0.17 0.18 0.19
RDA
Month -End Book Value*** $ 160,560 $ 147,802 $ 148,730 $ 149,149 $ 158,671 $ 160,693
Month -End Market Value*** $ 160,623 $ 147,862 $ 148,761 $ 149,180 $ 158,703 $ 160,783
Paper Gain (Loss) $ 63 $ 60 $ 31 $ 31 $ 32 $ 90
Prior Year Book Variance $ (2,570) $ 6,079 $ 4,546 $ 4,929 $ 5,778 $ 37,378
Interest Earnings $ 268 $ 239 $ 221 $ 216 $ 202 $ 217
Yield -To -Maturity 2.23% 2.00% 1.84% 1.73% 1.61% 1.51%
Weighted Maturity (Days) 127 65 65 65 62 71
Effective Duration 0.20 0.05 0.07 0.09 0.10 0.12
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 January 2005
Market Value
$ 60,928
6,050
13,980
12,123
$ 93,081
Ratings * Market Value
AAA $ 26,487
Unrated ** 72,785
AA 17,868
A 5,310
A-1 8,965
Total: $ 131,415
Sector Market Value
Money Market Funds $ 19,417
LAIF 40,000
RDA Loan 32,785
MTNs 23,178
U.S. Treasury -
Federal Agency 7,070
Commercial Paper 8,965
Total: $ 131,415
Month City Yield LAIF Yield Variance
Feb04 1.58 1.44 0.14
Mar 1.56 1.47 0.09
Apr 1.54 1.45 0.09
May 1.53 1.43 0.11
Jun 1.58 1.47 0.11
Jul 1.68 1.60 0.07
Aug 1.74 1.67 0.06
Sep 1.84 1.77 0.07
Oct 1.96 1.89 0.07
Nov 2.08 2.00 0.08
Dec 2.26 2.20 0.06
Jan05 2.54 2.26 0.28
* Moody's Credit Ratings
** LAIF, and City Loan to RDA
General Fund Ageing'
100
80 -
60 -
t40
0
a
20
65
<1M
6 0 El0 0 fl
1-I
< 2M < 3M < 6M < 1 YR <2YR < 3YR
15 13
Performance'
2.6
1.0
Feb04 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan05
LAIF Yiel:. "'City Yi ;cz
Page 2 of 8
City of Palm Desert
Portfolio Holdings
31 January 2005
Market
Par Value
Medium -Term Note
$ 2,406,000
$ 3,000,000
$ 3,000,000
$ 2,500,000
$ 1,610,000
$ 4,612,000
$ 3,000,000
$ 1,270,000
$ 1,000,000
Issuer
ABBOTT LABS
BANK ONE
FORD
FORD
FORD
FORD
GOLDMAN SACHS
PITNEY BOWES
WACHOVIA
Coupon 1 Maturity I_ Cost I YTM
6.80
4.13
7.20
7.20
6.75
7.20
7.20
5.95
7.70
5/15/05
9/1/07
6/15/07
6/15/07
5/15/05
6/15/07
3/1/07
2/1/05
2/15/05
$ 2,438,309
$ 3,035,449
$ 3,090,690
$ 2,575,575
$ 1,628,105
$ 4,825,393
$ 3,220,947
$ 1,270,000
$ 1,002,432
2.08
3.64
5.75
5.75
2.80
5.10
3.50
1.32
1.38
Price I Value
101.01 $
101.29 $
105.15 $
105.15 $
100.95 $
105.15 $
105.97 $
100.00 $
100.17 $
2,430,354
3,038,589
3,154,605
2,628,838
1,625,327
4,849,680
3,178,992
1,270,000
1,001,726
Ratings
Moody's I S & P
Al
Aa3
A3
A3
A3
A3
Aa3
Aa3
Aa3
AA
A+
BBB -
BBB -
BBB -
BBB -
A+
AA
A
$ 22,398,000
Subtotal
$ 23,086,901 3.99
$ 23,178,110
Commercial Paper -
$ 3,000,000
$ 3,000,000
$ 3,000,000
- Discount
GENERAL ELECTRIC
GENERAL ELECTRIC
GENERAL ELECTRIC
2.56 5/13/05 $ 2,976,107 2.62 99.25 $ 2,977,390
2.63 6/15/05 $ 2,968,221 2.70 99.91 $ 2,997,270
2.71 7/15/05 $ 2,960,479 2.78 99.67 $ 2,989,990
P-1
P-1
P-1
A-1 +
A-1+
A-1+
9,000,000
Subtotal
$ 8,904,807 2.70
$ 8,964,650
Federal Agencies -- Discount
$ 1,015,000 FED NATIONAL MTG ASSOC
$ 3,035,000 FED NATIONAL MTG ASSOC
$ 3,045,000 FED NATIONAL MTG ASSOC
1.92 5/2/05 $ 997,021 2.00 99.35 $ 1,008,403
1.71 3/3/05 $ 2,995,644 1.78 99.80 $ 3,028,930
1.79 4/1/05 $ 2,999,427 1.86 99.59 $ 3,032,515
Aaa
Aaa
Aaa
AAA
AAA
AAA
$ 7,095,000
Subtotal
$ 6,992,092 1.85
$ 7,069,848
LGIP
$ 40,000,000 L.A.I.F.
0.00 2/1/05 $ 40,000,000 2.26 100.00 $ 40,000,000
$ 40,000,000
Subtotal
$ 40,000,000 2.26
$ 40,000,000
LGIP
$ 10,402,274 C.A.M.P.
0.00 2/1/05 $ 10,402,274 2.09 100.00 $ 10,402,274
AAA
$ 10,402,274
Subtotal
$ 10,402,274 2.09
$ 10,402,274
Pooled Funds -- AIM
$ 9,014,730 PRIME PORTFOLIO
0.00 2/1/05 $ 9,014,730 1.95 100.00 $ 9,014,730
Aaa
AAA
$ 9,014,730
Subtotal
$ 9,014,730 1.95
$ 9,014,730
City Loan to RDA
$ 32,785,480 CITY OF PALM DESERT
0.00 2/1/35 $ 32,785,480 2.26 100.00 $ 32,785,480
$ 32,785,480
Subtotal
$ 32,785,480 2.26
$ 32,785,480
"U" = Unrated
Page 3 of 8
I Par Value
City of Palm Desert
Portfolio Holdings
31 January 2005
Market
Total Investments
$ 130,695,484
Cash
$ 8,349,561
$ 301,332
$ 380,408
Issuer
CITY MAIN CHKG
DESERT WILLOW CHKG
RECREATIONAL FAC CHKG
Coupon' Maturity 1 Cost I YTM
$ 131,186,283 2.54
Price 1 Value
$ 131,415,092
0.00 2/1/05 $ 8,349,561 0.00 100.00 $ 8,349,561
0.00 2/1/05 $ 301,332 0.00 100.00 $ 301,332
0.00 2/1/05 $ 380,408 0.00 100.00 $ 380,408
Ratings
Moody's ! S & P
N/A
N/A
N/A
N/A
N/A
N/A
$ 9,031,301
Subtotal
$ 9,031,301
$ 9,031,301
Total Investments and Cash
$ 139,726,785
$ 140,217,584
$ 140,446,393
"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 January 2005
Market Value
$ 75,290
3,028
2,952
3,092
9,023
$ 93,385
Quality * Market Value
AAA $ 91,455
Unrated ** 60,704
AA -
A
A-1 5,986
Total: $ 158,145
Sector Market Value
U.S. Treasury $ 23,078
Money Market Funds 50,223
LAIF 60,704
Federal Agency 15,066
Commercial Paper 5,986
Corporate Bonds 3,088
Total: $ 158,145
Month RDA Yield LAIF Yield Variance
Feb04 1.20 1.44 -0.24
Mar 1.20 1.47 -0.28
Apr 1.22 1.45 -0.23
May 1.17 1.43 -0.26
Jun 1.37 1.47 -0.10
Jul 1.53 1.60 -0.08
Aug 1.51 1.67 -0.16
Sep 1.61 1.77 -0.17
Oct 1.73 1.89 -0.16
Nov 1.84 2.00 -0.17
Dec 2.00 2.20 -0.20
Jan05 2.23 2.26 -0.03
* Moody's Credit Ratings
** LAIF
Portfolio Ageing w/o SLGSsI
100
90
80
70
60
50
I40
o. 30
20
10
0
81
3
0 0
3
3 10
n 0
< 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR
Performance 1
2.4
1.4
1.0
Lima 'kill'
Feb04 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan05
■ LAIF Yield I! RDA Yield
Page 5 of 8
IPar Value
Palm Desert Redevelopment Agency
Portfolio Holdings
31 January 2005
Market
Medium -Term Notes
$ 3,000,000
Issuer
FORD
'Coupon! Maturity I Cost I YTM
Price I Value
6.50 1/25/07 $ 3,092,246 4.85 102.95 $ 3,088,413
Ratings
Moody's I S & P
A3
BBB-
$ 3,000,000
Subtotal
$ 3,092,246 4.85
$ 3,088,413
Commercial Paper --
$ 3,039,000
$ 3,000,000
Discount
GENERAL ELECTRIC
GENERAL ELECTRIC
1.73 3/1/05 $ 2,999,569 1.80 99.80 $ 3,032,855
2.77 8/15/05 $ 2,952,448 2.87 98.44 $ 2,953,287
P-1
P-1
A-1 +
A-1 +
$ 6,039,000
Subtotal
$ 5,952,017 2.33
$ 5,986,142
U.S. Treasury -- Coupon
$ 23,107,000 UNITED STATES TREASURY 1.63
3/31/05 $ 23,098,399 1.86 99.88 $ 23,078,116
Aaa
AAA
$ 23,107,000
Subtotal
$ 23,098,399 1.86
$ 23,078,116
Federal Agency -
$ 3,000,000
$ 3,000,000
$ 3,000,000
- Coupon
FED FARM CREDIT BANK
FED HOME LOAN BANK
FED HOME LOAN MTG
2.63 9/17/07 $ 2,939,026 3.43 97.66 $ 2,929,688
3.38 9/14/07 $ 2,992,777 3.82 99.47 $ 2,984,063
4.88 3/15/07 $ 3,090,919 3.38 102.81 $ 3,084,375
Aaa
Aaa
Aaa
AAA
AAA
AAA
$ 9,000,000
Subtotal
$ 9,022,722 3.54
$ 8,998,125
Federal Agency -- Discount
$ 3,040,000 FED NATIONAL MTG ASSOC
$ 3,040,000 FED NATIONAL MTG ASSOC
1.75 3/4/05 $ 2,999,509 1.82 99.79 $ 3,033,616
1.71 3/1/05 $ 3,001,012 1.78 99.81 $ 3,034,224
Aaa
Aaa
AAA
AAA
$ 6,080,000
Subtotal
$ 6,000,521 1.80
$ 6,067,840
LGIP
$ 40,000,000
$ 5,727,930
$ 5,092,135
$ 9,883,828
L.A.I.F.
L.A.I.F. (HOUSING)
L.A.I.F. BOND PROCEEDS
L.A.I.F. BOND PROCEEDS
0.00
0.00
0.00
0.00
2/1/05
2/1/05
2/1/05
2/1/05
$ 40,000,000
$ 5,727,930
$ 5,092,135
$ 9,883,828
2.26 100.00 $ 40,000,000
2.26 100.00 $ 5,727,930
2.26 100.00 $ 5,092,135
2.26 100.00 $ 9,883,828
U
U
U
U
U
U
U
U
$ 60,703,893
Subtotal
$ 60,703,893 2.26
$ 60,703,893
LGIP
$ 21,067,877
C.A.M.P.
0.00
2/1/05
$ 21,067,877
2.09 100.00 $ 21,067,877
AAA
$ 21,067,877
Subtotal
$ 21,067,877 2.09
$ 21,067,877
Pooled Funds -- AIM
$ 29,154,658 PRIME PORTFOLIO
0.00
2/1/05
$ 29,154,658
1.95 100.00 $ 29,154,658
Aaa
AAA
$ 29,154,658
Subtotal
$ 29,154,658 1.95
$ 29,154,658
Total Investments
$ 158,152,427
$ 158,092,332 2.23
$ 158,145,063
"U" = Unrated
Page 6 of 8
IPar Value
Palm Desert Redevelopment Agency
Portfolio Holdings
31 January 2005
Market
Cash
$ 2,161,827
$ 315,697
Issuer !Coupon' Maturity I Cost I YTM
Price I Value
Ratings
Moody's' S & P
HOUSING AUTH CHKG 0.00 2/1/2005 $ 2,161,827 0.00 100.00 $ 2,161,827 N/A N/A
HOUSING AUTH TRUST
0.00 2/1/2005 $ 315,697 0.00 100.00 $ 315,697 N/A N/A
$ 2,477,524 Subtotal
$ 2,477,524
$ 2,477,524
Total Investments and Cash
$ 160,629,951
$ 160,569,856
$ 160,622,587
"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 January 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 23 February 2005,
PauLS. Othsom C. C. A'I, 7:
City Treasurer
SUMMARY OF AUTHORIZED INVESTMENTS
ICalifornia 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 Years
No Limit
5 Years I No Limit
0.0%
14.6%
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
5 Years
No Limit
5 Years
30%
6%
5.3%
9.5%
53601(f)
Bankers's Acceptances
180 Days
40%
180 Days
40%
A-1 & P-1
-
-
53601(g)
Commercial Paper
270 Days
25%
A-1+ or P-1
270 Days
25%
A-1+ or P-1
6.8%
3.8%
53601(h)
Negotiable CDs
5 Years
30%
5 Years
30%
AA- or Aa3
-
-
53601(i)
Repos
1 Year
No Limit
30 Days
20%
AAA & Aaa
-
-
53601(i)
Reverse Repos
92 Days
20%
Not Authorized
536010
Medium -Term Notes
5 Years
30%
A
5 Years
30%
A
17.6%
2.0%
53601(k)
Mutual Funds
90 Days
20%
AAA & Aaa
90 Days
20% (2)
AAA & Aaa
6.9%
18.4%
53601(1)
Trust Indenture Debt
Not Authorized
53601(m)
Secured Bank Deposits
5 Years
No Limit
Not Authorized
53601(k)
Local Government
Investment Pools
90 Days
20%
AAA & Aaa
or Advisor
90 Days
20% (2)
AAA & Aaa
or Advisor
7.9%
13.3%
53601(n)
Mortgage -Backed
Securities
5 Years
20%
A (Issuer) &
AA (Security)
Not Authorized
LAIF
No Limit
I No Limit I
30.5%
38.4%
(1) The Ci
y loan to RDA, which is not a bond, has been approved by the Palm Desert City Council.
75.0%
100.0%
(2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds.
* Certified California Municipal Treasurer
Page 8of8