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Home My WebLink AboutInvestment Reports - April 2006X C ��ty City a�o �G.deW$ opm$i .P►� ncy Po f01 f CtLitiNCE4fi( LY9l %N'CfIStMT Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer Treasurer's Commentary On May 10, the Federal Open Market Committee (FOMC) raised the Federal Funds Rate by 25 basis points to 5.00% -- the 16th consecutive increase. The FOMC sought to strike a balance between inflation concerns, and a pause in rate hikes. Current data shows a strong economy with inflationary pressure building, driven by commodities prices. Once the FOMC pauses, the yield curve should steepen, the dollar should weaken, and the equity markets should rally for at least 3 months. The surging stock market is being driven by 11 consecutive quarters of corporate profits -- a record unrivaled since the 1950s. This is an export -driven boom. U.S. companies that export to the "BRIC" countries (Brazil, Russia, India, and China) are benefitting from 1920s U.S.-style economic growth in those countries, which are putting infrastructure (public works, transportation, and telecommunications) in place. U.S, energy, power, and transportation companies, in particular, are doing well by selling power plants, aircraft, and petroleum products to the BRIC countries. Since U.S. export companies are linked to foreign economies, the FOMC's interest rate hikes are having less effect on the U.S. economy, except for interest rate -sensitive sectors such as real estate. Many U.S. companies continue to have their profitability squeezed by unfunded pension plans, spiraling health care costs, and competition from well-educated foreign workforces (China, Korea, and India) that will work for less. The future of the U.S. economy may be low wages (foreign competition), high taxes (social programs), and a weak dollar (imports). Pis 67dlom C. c.Al r Treasurer PORTFOLIO STATISTICS Dollars in Thousands APR-06 MAR-06 FEB-06 JAN-06 DEC-05 NOV-05 CITY Month -End Book Value'` $ 150,753 $ 149,944 $ 147,007 $ 147,649 $ 143,187 $ 146,910 Month -End Market Value` $ 149,906 $ 149,118 $ 146,312 $ 146,991 $ 142,231 $ 145,957 Paper Gain (Loss) $ (847) $ (826) $ (695) $ (658) $ (956) $ (953) Prior Year Book Variance $ 4,436 $ 3,087 $ 4,320 $ 7,431 $ 18,463 $ 18,308 Interest Earnings $ 506 $ 513 $ 476 $ 454 $ 460 $ 440 Yield -To -Maturity 4.47% 4.38% 4.31 % 4.06% 3.95% 3.81 % Weighted Maturity (Days) 419 415 414 210 215 215 Effective Duration 0.71 0.73 0.76 0.27 0.29 0.31 RDA Month -End Book Value *'" $ 142,678 $ 149,459 $ 153,652 $ 151,779 $ 125,395 $ 121,211 Month -End Market Value *'* $ 142,043 $ 148,888 $ 153,233 $ 151,479 $ 124,957 $ 120,754 Paper Gain (Loss) $ (635) $ (571) $ (419) $ (300) $ (438) $ (457) Prior Year Book Variance $ 17,442 $ (8,865) $ (5,453) $ (8,781) $ (22,407) $ (27,519) Interest Earnings $ 522 $ 553 $ 494 $ 435 $ 385 $ 361 Yield -To -Maturity 4.50% 4.38% 4.26% 3.99% 3.82% 3.68% Weighted Maturity (Days) 429 410 415 128 153 158 Effective Duration 0.86 0.86 0.86 0.15 0.20 0.23 *** Omits SLGSs. Dollars in Thousands Aaeina Interval < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: Ratin s AAA AA A Unrated ** BB - Total: Sector MMFs LAI F RDA Loan MTNs Agencies CID Total: Month May05 Jun Jul Aug Sep Oct Nov Dec Jan06 Feb Mar Apr City of Palm Desert -- Portfolio Characteristics 30 April 2006 Market Value $ 46,437 2,980 7,854 14,239 12,778 12,855 $ 97,143 Market Value $ 59,216 $ 2,090 $ 5,995 60,510 9,974 $ 137,785 Market Value $ 18,539 27,724 32,785 21,959 36,778 $ 137,785 General Fund Ageing 100 80 0 60 48 40 i 0 a 20 8 15 13 0 0 3 ^ r- i F1 0 < 1 M < 2M < 3M < 6M < 1YR < 2YR < 3YR f Credit Quality AAA AA 43% 2% BB- A 7% 4% i Unrated `* 44% Asset Allocation RDA Loan 24% LAIF MTNs 20% 16% MMFs Agencies 13% 27% Citv Yield LAIF Yield Variance Performance 3.06 2.86 0.21 3.29 2.97 0.32 4.6 3.37 3.08 0.29 3.43 3.18 0.25 4.1 3.56 3.32 0.24 3.67 3.46 0.21 i 3.6 3.81 3.64 0.17 } 3.1 3.95 3.81 0.14 j 4.06 3.96 0.10 2.6 4.31 4.04 0.27 May05 Jun Jul Aug Sep Oct Nov Dec Jan06 Feb Mar Apr 4.38 4.14 0.23 4.47 4.30 0.17 ■LAIF Y�eid ®City Yield * Standard and Poors ** LAIF, and City Loan to RDA Page 2 of 8 City of Palm Desert Portfolio Holdings 30 April 2006 Market Ratings Par Value I Issuer Coupon I Maturity Cost YTM I Price I Value Moody'sI S&P Medium -Term Notes $ 3,000,000 BANK ONE 4.13 9/1/07 $ 3,018,296 3.64 98.30 $ 2,949,009 Aa3 $ 3,000,000 FORD MOTOR CREDIT CORP 7.20 6/15/07 $ 3,042,903 5.75 98.63 $ 2,958,975 Ba2 $ 2,500,000 FORD MOTOR CREDIT CORP 7.20 6/15/07 $ 2,535,752 5.75 98.63 $ 2,465,813 Ba2 $ 4,612,000 FORD MOTOR CREDIT CORP 7.20 6/15/07 $ 4,712,949 5.10 98.63 $ 4,548,931 Ba2 $ 2,000,000 GENERAL ELECTRIC 3.13 1119/06 $ 1,991,965 3.92 98.90 $ 1,978,080 Aaa $ 2,000,000 GENERAL ELECTRIC 3.60 10/15/08 $ 1,936,744 4.99 96.15 $ 1,923,060 Aaa $ 3,000,000 GOLDMAN SACHS 7.20 311/07 $ 3,088,379 3.50 101.52 $ 3,045,744 Aa3 $ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,115,710 4.93 104.48 $ 2,089,552 Aa2 $ 22,112,000 Subtotal $ 22,442,699 4.72 $ 21,959,164 Federal Agencies -- Coupon $ 3,000,000 FED HOME LOAN BANK 3.70 8/15/07 $ 2,996,595 3.79 98.19 $ 2,945,625 Aaa AAA $ 1,500,000 FED HOME LOAN BANK 2.10 10/13/06 $ 1,488,957 3.79 98.63 $ 1,479,375 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,954,548 5.59 97.38 $ 2,921,250 Aaa AAA $ 1,980,000 FED HOME LOAN BANK 4.75 12/12/08 $ 1,973,523 4.87 98.97 $ 1,959,581 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.63 9/12108 $ 2,983,928 5.40 98.81 $ 2,964,375 Aaa AAA $ 2,049,000 FED HOME LOAN BANK 4.00 12/15/09 $ 1,990,904 4.87 96.09 $ 1,968,961 Aaa AAA $ 2,035,000 FED HOME LOAN MTG CORP 2.50 12/4/06 $ 2,019,439 3.84 98.41 $ 2,002,567 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 1,996,206 4.87 97.31 $ 1,978,363 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,951,493 4.88 96.60 $ 1,932,004 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.90 11/3/08 $ 1,992,560 5.06 98.94 $ 1,978,766 Aaa AAA $ 2,786,000 FED NATIONAL MTG ASSOC 7.13 3/15/07 $ 2,869,331 3.55 101.59 $ 2,830,402 Aaa AAA $ 3,000,000 FED NATIONAL MTG ASSOC 3.00 8/15/07 $ 2,977,286 3.63 97.31 $ 2,919,375 Aaa AAA $ 3,000,000 FED NATIONAL MTG ASSOC 2.75 8/11/06 $ 2,991,380 3.81 99.34 $ 2,980,313 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,983,753 4.88 98.25 $ 1,965,000 Aaa AAA $ 33,383,000 Subtotal $ 33,169,901 4.46 $ 32,825,957 Federal Agencies - Callable $ 2,000,000 FED HOME LOAN BANK 4.20 7/18/08 $ 1,971,978 4.88 98.00 $ 1,960,000 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.05 8/22108 $ 1,999,423 5.06 99.60 $ 1,991,938 Aaa AAA $ 4,000,000 Subtotal $ 3,971,401 4.97 $ 3,951,938 ' Local Government Investment Pool $ 27,724,344 L.A.I.F. 0.00 5/1/06 $ 27,724,344 4.30 100.00 $ 27,724,344 U U $ 27,724,344 Subtotal $ 27,724,344 4.30 $ 27,724,344 Local Government Investment Pool $ 10,579,441 C.A.M.P. $ 10,579,441 Subtotal 0.00 5/1/06 $ 10,579,441 4.67 100.00 $ 10,579,441 U AAA $ 10,579,441 4.67 $ 10,579,441 1 "U" = Unrated Page 3 of 8 City of Palm Desert Portfolio Holdings 30 April 2006 Par Value I Issuer Coup Corporate Issuers o Market Ratings n I Maturity Cost YTM I Price I Value Moody's I S&P 5/1/06 $ 7,959,400 4.60 100.00 $ 7,959,400 Aaa AAA $ 7,959,400 4.60 $ 7,959,400 5/1/36 $ 32,785,480 4.30 100.00 $ 32,785,480 $ 32,785,480 4.30 $ 32,785,480 $ 138,632,665 4.47 $ 137,785,723 5/1/06 $ 9,683,243 0.00 100.00 $ 9,683,243 5/1/06 $ 1,420,382 0.00 100.00 $ 1,420,382 5/1/06 $ 626,469 0.00 100.00 $ 626,469 5/1/06 $ 390,446 0.00 100.00 $ 390,446 $ 12,120,540 $ 12,120,540 FORD MOTOR CREDIT CORPORATION GENERAL ELECTRIC CAPITAL CORPORATION GOLDMAN SACHS BANK ONE WAL-MART $ 150,753,205 % of Portfolio (Market Value) 6.65% 2.60% 2.03% 1.97% 1.39% N $ 149,906,263 U U N/A N/A N/A N/A N/A N/A N/A NIA "U" = Unrated Page 4 of 8 Dollars in Thousands Aaeino Interval < 1M < 2M < 3M < 6M < 1YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: Quali AAA AA A Unrated ** BI3- Total: Sector LAW MMFs Agencies MTNs CP Treasuries Total: Month May05 Jun Jul Aug Sep Oct Nov Dec Jan06 Feb Mar Apr Palm Desert Redevelopment Agency -- Portfolio Characteristics 30 April 2006 Market Value r 1 Portfolio Ageing w/o SLGSs� $ 45,290 I _ 100 5,915 90 80 ' 8,906 0 70 5,832 I c 60 0 43 21,554 400 18,564 a° 30 2200 1n8 20 i 10 0 o 6 S 5 - 1 0 1 I 1 I $ 106,061 < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR Market Value Credit Qualityl 1 AA $ 77,550 % $ 1,942 i 56A A $ 2,025 1% ioL 56,342 2,981BB(- 3-** $ 140,840 2% 40% Market Value Asset Allocation MFs $ 56,342 'y 17% 23,726 LAIF 40% 53,823 6,949 - - MTNs Agencies 38% $ 140,840 5% RDA Yield LAIF Yield Variance Performance 2.93 2.86 0.07 1 3.09 2.97 0.13 1 4.6 3.21 3.08 0.13 3.32 3.18 0.14 4.1 3.42 3.32 0.10 3.54 3.46 0.08 a 3.6 3.68 3.64 0.04 } 31 3.82 3.81 0.01 3.99 3.96 0.03 2.6 4.26 4.04 0.22 May05Jun Jul Aug Sep Oct Nov DecJan06 Feb Mar Apr 4.38 4.14 0.24 4.50 4.30 0.20 M LAI F Yield 0 RDA Yield Standard and Poors ** LAIF Page 5 of 8 Palm Desert Redevelopment Agency Portfolio Holdings 30 April 2006 Market Ratings I Par Value Issuer I Coupon) Maturityl Cost I YTM I Price I Value Moody'sIS & P Medium -Term Notes $ 3,000,000 FORD MOTOR CREDIT CORP 6.50 1/25107 $ 3,034,108 4.85 99.38 $ 2,981,430 Ba2 BB- $ 2,000,000 FIRST UNION NATIONAL BANK 5.80 12/1/08 $ 2,037,965 5.00 101.25 $ 2,024,980 Aa3 A+ $ 2,000,000 WELLS FARGO BANK 4.00 8/15/08 $ 1,959,119 4.96 97.11 $ 1,942,222 Aal AA- $ 7,000,000 Subtotal $ 7,031,192 4.93 $ 6,948,632 Federal Agency - Coupon $ 3,000,000 FED FARM CREDIT BANK 2.63 9/17/07 $ 2,968,030 3.43 96.72 $ 2,901,563 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,097,456 4.88 103.89 $ 2,077,878 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 3.63 10/24/08 $ 1,941,957 4.89 96.47 $ 1,929,375 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 4.75 8/3/09 $ 1,992,865 4.87 98.91 $ 1,978,125 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 3.38 9/14/07 $ 2,996,224 3.82 97.69 $ 2,930,625 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9112/08 $ 3,916,491 4.79 97.97 $ 3,889,359 Aaa AAA $ 3,970,000 FED HOME LOAN BANK 4.25 9/12/08 $ 3,916,491 4.79 97.97 $ 3,889,359 Aaa AAA $ 4,500,000 FED HOME LOAN BANK 4.38 9/11109 $ 4,431,822 5.59 97.38 $ 4,381,875 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 1113/09 $ 1,912,420 4.88 94.56 $ 1,891,250 Aaa AAA $ 4,000,000 FED HOME LOAN BANK 4.63 9/12/08 $ 3,978,570 4.84 98.81 $ 3,952,500 Aaa AAA $ 2,005,000 FED HOME LOAN BANK 3.88 7/24/09 $ 1,945,207 4.89 96.09 $ 1,926,680 Aaa AAA $ 3,000,000 FED HOME LOAN MTG CORP 4.88 3/15/07 $ 3,037,367 3.38 99.72 $ 2,991,563 Aaa AAA $ 2,974,000 FED HOME LOAN MTG CORP 3.63 9/15/06 $ 2,974,327 3.60 99.44 $ 2,957,271 Aaa AAA $ 2,974,000 FED HOME LOAN MTG CORP 3.63 9/15/06 $ 2,974,387 3.60 99.44 $ 2,957,271 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 1,990,704 4.87 96.09 $ 1,968,961 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 5.00 7/23/08 $ 1,997,168 5.07 99.48 $ 1,989,680 Aaa AAA $ 2,973,000 FED NATIONAL MTG ASSOC 3.63 3/15/07 $ 2,974,815 3.95 98.66 $ 2,933,050 Aaa AAA $ 4,155,000 FED NATIONAL MTG ASSOC 6.63 9115109 $ 4,375,049 4.89 104.44 $ 4,339,378 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 3.88 11 /17/08 $ 1,953,054 4.87 96.84 $ 1,936,875 Aaa AAA $ 54,570,000 Subtotal $ 54,374,405 4.52 $ 53,822,638 Local Government Investment Pool $ 35,972,381 L.A.I.F. 0.00 5/1/06 $ 35,972,381 4.30 100.00 $ 35,972,381 U U $ 5,960,895 L.A.I.F. (HOUSING) 0.00 5/1/06 $ 5,960,895 4.30 100.00 $ 5,960,895 U U $ 13,913,879 L.A.I.F. BOND PROCEEDS 0.00 5/1/06 $ 13,913,879 4.30 100.00 $ 13,913,879 U U $ 495,035 L.A.I.F. BOND PROCEEDS 0.00 511/06 $ 495,035 4.30 100.00 $ 495,035 U U $ 56,342,190 Subtotal $ 56,342,190 4.30 $ 56,342,190 Local Government Investment Pool $ 8,466,884 C.A.M.P. 0.00 5/1/06 $ 8,466,884 4.67 100.00 $ 8,466,884 U AAA $ 8,466,884 Subtotal $ 8,466,884 4.67 $ 8,466,884 Money Market Fund $ 15,258,998 WF GOVERNMENT MMF 0.00 5/1/06 $ 15,258,998 4.43 100.00 $ 15,258,998 Aaa AAA $ 15,258,998 Subtotal $ 15,258,998 4.43 $ 15,258,998 "U" = Unrated Page 6 of 8 Palm Desert Redevelopment Agency Portfolio Holdings 30 April 2006 I Par Value I Issuer Total Investments $ 141,638,072 Cash $ 878,480 HOUSING AUTH CHKG $ 325,406 HOUSING AUTH TRUST $ 1,203,886 Subtotal Total Investments and Cash $ 142,841,958 Market Ratings ICouponl Maturity) Cost I YTM I Price I Value Moody'slS & P $ 141,473,668 4.50 $ 140,839,342 0.00 5/1/06 $ 878,480 0.00 100.00 $ 878,480 NIA N/A 0.00 5/1/06 $ 325,406 0.00 100.00 $ 325,406 N/A N/A $ 1,203,886 $ 1,203,886 Corporate Issuers FORD MOTOR CREDIT CORPORATION FIRST UNION NATIONAL BANK WELLS FARGO BANK $ 142,677,554 % of Portfolio (Market Value) 2.10% 1.43% 1.37% $ 142,043,228 "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 30 April 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 23 May 2006, Pa ZS. GVv&�, C. C. A1. 7. * City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS 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 Years No Limit 5 Years No Limit 1 1 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% 53601(f) Bankers's Acceptances 180 Days 40% 180 Days 40% A-1 53601(g) Commercial Paper 270 Days 25% A-1+ or P-1 270 Days 25% A-1+ or P-1 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 536016) Medium -Term Notes 5 Years 0 3010 A 5 Years 0 30% 53601(k) Mutual Funds 90 Days 20% AAA & Aaa 90 Days 20% (2) JA AAA & Aaa 53601(1) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) Local Government AAA & Aaa AAA & Aaal Investment Pools 90 Days 20% or Advisor 90 Days 20% (2) I or Advisor 53601(n) Mortgage -Backed 5 Years 20% A (Issuer) & Not Authorized Securities AA (Security 0.0% " 1 0.0% 26.8% 38.4% 0.0% 0.0% 16.2% I 5.0% 5.7% i 10.8% 7.6% 1 6.0% LAIF No Limit I No Limit 1 20.0% 39.8% (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. 76.4% I 100.0% (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. Certified California Municipal Treasurer Page 8 of 8