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Home My WebLink AboutInvestment Report - May 2009 ��,,.� City of Pa/m Desert .,,- --„�. � City and Redevelopment Agency PortEolias COMPLIANCE ANALYSIS AND'INVESTMENT REPORT May 2009 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 will meet next on June 23-24. No change in interest rates is expected. Federal Funds Futures, however, are projecting a December 2009 Federal Funds rate of 0.50% and a March 2010 rate of 1.00°/a. These projections are being driven by signs that the pace of economic decline is moderating, and by inflation fears due to U.S. economic policy. Treasury yield curves have also experienced a recent, rapid steepening. Obama's $1.2 trillion stimulus program is RAISING, not lowering mortgage interest rates. This is threatening a housing recovery, which is essential for an economic recovery. The U.S. Government is monetizing its debt by issuing debt, and then "printing"the money to buy it. This dilutes the dollar, and inevitably leads to inflation. It also implicitedly recognizes the absence of foreign demand for U.S. Treasuries. Russia has already announced that it will not buy any more U.S. Treasuries. This puts pressure on the U.S. Treasury to raise interest rates to attract buyers, and this raises mortgage rates. If unfunded Social Security and Medicare obligations are included, then the Federal deficit is over$100 TRILLION DOLLARS. This figure does not include the cost of a new national health plan. Congress is currently discussing various ways to finance a national health plan, which include taxing employee health benefits and adopting a national sales tax �Value Added Tax or"VAT"), which would be in addition to state sales tax. In Europe, VATs range from 10% --25% of product value. ��s G�� c.c.M r City Treasurer PORTFOLIO STATISTICS Dollars in Thousands May-09 Apr-09 Mar-09 FEB-09 JAN-09 DEC-08 CITY Month-End Book Value*"* $ 224,289 $ 217,963 $ 216,674 $ 219,469 $ 212,738 $ 199,053 Month-End Market Value*** $ 225,317 $ 218,619 $ 216,589 $ 218,243 $ 213,002 $ 199,922 Paper Gain(Loss) $ 1,028 $ 656 $ (85) $ (1,226) $ 264 $ 869 Prior Year Book Variance $ (457) $ (4,768) $ (15,800) $ (7,452) $ (18,677) $ (38,071) Interest Earnings $ 360 $ 360 $ 460 $ 443 $ 430 $ 471 Yield-To-Maturity 2.04% 2.09% 2.43% 2.34% 2.55% 2.87% Weighted Maturity(Days) 319 329 324 419 454 490 Effective Duration 0.27 0.29 0.36 0.42 0.47 0.54 RDA Month-End Book Value"** $ 293,720 $ 252,527 $ 268,377 $ 270,416 $ 281,273 $ 251,852 Month-End Market Value""` $ 294,940 $ 253,785 $ 269,503 $ 271,497 $ 282,566 $ 253,288 Paper Gain(Loss) $ 1,220 $ 1,258 $ 1,126 $ 1,081 $ 1,293 $ 1,436 Prior Year Book Variance $ (5,751) $ (9,242) $ (7,168) $ (9,283) $ (4,674) $ 877 Interest Earnings $ 234 $ 219 $ 259 $ 283 $ 268 $ 287 Yield-To-Maturity 1.06% 1.05% 1.07% 1.29% 1.25% 1.40% Weighted Maturity(Days) 187 217 205 235 226 256 Effective Duration 0.13 0.16 0.17 0.18 0.19 0.24 � """` Omits SLGSs. City of Palm Desert-- Portfolio Characteristics - May 31, 2009 Dollars in Thousands Aqeinq Interval Market Value < �M $ 109,742 General Fund Ageing <2M 2,043 <3M 5,058 100 �'m- <gM 9,127 „ 80 65 < 1 YR 12,447 0 <2YR 21,533 0 60 <3YR 8,047 � 40 <4YR - a° 13 2� 1 3 5 � 5 0 0 0 <5YR - � >5YR - Total: $ 167,997 <1 M <2M <3M <6M <1 YR<2YR<3YR<4YR<5YR>5YR Credit Quality � Ratinqs* Market Value qqq $ 93,669 44% qq 25,598 � 12% q 6,858 Unrated*" A Unrated"` 89,223 41% Total: $ 215,348 3% � Sector Market Value Asset Allocation MTNs CAMP MMF $ 32,333 15% 23% Agencies 25,�99 MTNs 32,457 RDA Loan CAMP 35,537 Agencies � 11% 12% RDA Loan 22,655 GMRA 30,255 GMRA 14% LAIF 36,312 M5 a CP - LAIF Total: $ 215,348 17% Month Citv Yield LAIF Yield Variance Performance Jun08 3.75 2.89 0.86 Jul 3.69 2.88 0.82 3.8 Aug 3.65 2.78 0•87 Sep 3.70 2.77 0.93 3.2 Oct 3.27 2.71 0.56 = Nov 3.04 2.57 0.47 '� 2'6 d Dec 2.87 2.35 0.52 � 2.0 Jan09 2.55 2.05 0.51 Feb 2.36 1.87 0.50 1.4 Mar 2.17 1.82 0.35 Jun08 Jul Aug Sep Oct Nov Dec Jan09 Feb Mar Apr May Apr 2.09 1.61 0.49 May 2.04 1.53 0.51 0" ��' i ■�: �, � ._.�:a " Standard and Poors ""` LAIF,and City Loan to RDA Page 2 City of Palm Desert Portfolio Holdings May 31, 2009 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S8�P Medium-Term Notes $ 3,795,000 BANK OF AMERICA 5.38 8/15/11 $ 3,897,489 4.05 102.24 $ 3,880,164 A2 A $ 3,000,000 BANK OF AMERICA 4.25 10/1/10 $ 3,039,969 3.20 99.28 $ 2,978,316 A2 A $ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 2,016,216 5.63 102.07 $ 2,077,063 Aa2 AA+ $ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,920,467 5.65 105.07 $ 1,986,787 Aa2 AA+ $ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,013,736 5.67 104.66 $ 2,093,178 Aa2 AA+ $ 3,965,000 GENERAL ELECTRIC 4.88 10/21/10 $ 4,051,083 3.23 102.07 $ 4,046,957 Aa2 AA+ $ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,061,945 5.02 104.77 $ 2,095,406 A1 AA $ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,006,772 4.93 101.16 $ 2,023,168 Aa2 AA $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,022,216 2.90 101.16 $ 3,034,752 Aa2 AA $ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,095,287 5.13 104.19 $ 4,167,768 A1 AA $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,989,983 5.09 101.34 $ 2,026,822 A1 AA $ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 2,010,982 4.96 101.31 $ 2,046,498 A1 AA $ 31,706,000 Subtotal $ 32,126,144 4.43 $ 32,456,879 Federal Agencies--Coupon $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,004,308 4.61 103.78 $ 3,113,439 Aaa AAA $ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,004,308 4.61 103.78 $ 3,113,439 Aaa AAA $ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,996,244 5.59 101.13 $ 3,033,750 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,980,723 5.96 101.31 $ 2,026,250 Aaa AAA $ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 2,031,597 4.87 100.47 $ 2,042,531 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,040,357 4.87 101.84 $ 2,086,779 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,993,656 4.88 101.66 $ 2,033,126 Aaa AAA $ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 2,046,156 5.47 104.03 $ 2,145,125 Aaa AAA $ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,033,538 5.50 101.84 $ 2,086,779 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,998,100 4.88 101.69 $ 2,033,750 Aaa AAA $ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,972,697 5.47 104.19 $ 2,083,750 Aaa AAA $ 25,193,000 Subtotal $ 25,101,685 5.13 $ 25,798,719 Local Agency Investment Pool $ 36,312,974 L.A.I.F. 0.00 6/1/09 $ 36,312,974 1.53 100.00 $ 36,312,974 U U $ 36,312,974 Subtotal $ 36,312,974 1.53 $ 36,312,974 Local Agency Investment Pool $ 35,479,583 C.A.M.P. 0.00 6/1/09 $ 35,479,583 0.60 100.00 $ 35,479,583 U AAA $ 57,226 C.A.M.P. (DESERT WILLOW) 0.00 6/1/09 $ 57,226 0.60 100.00 $ 57,226 U AAA $ 35,536,810 Subtotal $ 35,536,810 0.60 $ 35,536,810 Money Market Fund $ 32,332,761 WF TREASURY PLUS 0.00 6/1/09 $ 32,332,761 0.00 100.00 $ 32,332,761 Aaa AAA $ 32,332,761 Subtotal $ 32,332,761 0.00 $ 32,332,761 "U"= Unrated Page 3 City of Palm Desert Portfolio Holdings May 31, 2009 Market Ratings Par Value issuer Coupon Maturity Cost YTM Price Value Moody's S&P Government Managed Rate Account $ 30,254,845 UNION BANK 0.00 6/1/09 $ 30,254,845 1.77 100.00 $ 30,254,845 U U $ 30,254,845 Subtotal $ 30,254,845 1.77 $ 30,254,845 City of Palm Desert $ 22,655,000 CITY OF PALM DESERT 0.00 6/1/39 $ 22,655,000 1.61 100.00 $ 22,655,000 U U $ 22,655,000 Subtotal $ 22,655,000 1.61 $ 22,655,000 Total Investments $ 213,991,389 $ 214,320,218 2.04 $ 215,347,987 Cash $ 7,694,472 CITY MAIN CHKG 0.00 6/1/09 $ 7,694,472 0.00 100.00 $ 7,694,472 U U $ 1,859,901 DESERT WILLOW CHKG 0.00 6/1/09 $ 1,859,901 0.00 100.00 $ 1,859,901 U U $ 414,316 RECREATIONAL FAC CHKG 0.00 6/1/09 $ 414,316 0.00 100.00 $ 414,316 U U $ 9,968,689 Subtotal $ 9,968,689 $ 9,968,689 Total Investments and Cash $ 223,960,078 $ 224,288,907 $ 225,316,675 %of Portfolio Corporate Issuer (Market Value) BANK OF AMERICA 3.04% GENERAL ELECTRIC 4.53% WACHOVIA 0.93% WAL-MART 2.24% WELLS FARGO BANK 3.66% "U"= Unrated Page 4 City of Palm Desert Portfolio Holdings May 31, 2009 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P %of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 2.76% FED HOME LOAN BANK 2.25% FED HOME LOAN MTG CORP 4.61% FED NATIONAL MTG ASSOC 1.83% "U"= Unrated Page 5 Palm Desert Redevelopment Agency-- Portfolio Characteristics � May 31, 2009 Dollars in Thousands Aqeinq Interval Market Value partfolio Ageing w/o SLGSs < 1 M $ 91,535 <2M 2,016 <3M 5,050 100 -- 90 <6M 10,823 $� 65 < 1 YR 13,804 = 70 0 60 <2YR 18,675 '0 50 <3YR _ 40 <4YR - a 20 $ 10 13 10 1 4 0 0 0 0 <5YR - p >5YR ' <1 M <2M <3M <6M <1 YR<2YR<3YR<4YR<5YR>5YR Total: $ 141,903 Credit Quality Quality* Market Value qqq $ 234,162 � 80% qq 19,925 A - Unrated*" 40,020 Unrated" qq Total: $ 294,107 13% p jo 7% - � Sector Market Value Asset Allocation MMF $ 150,076 Agencies 30,443 MMF Ag10�ies MTNs 19,925 51% � CAM P 53,643 MTNs LAIF 40,020 7% CP - Treasuries - LAIF CAMP Total: $ 294,107 �4% �$��0 � � Month RDA Yield LAIF Yield Variance Performance Jun08 3.09 2.89 0.20 Jul 3.08 2.79 0.29 3.5 --- Aug 3.05 2.78 0.27 Sep 3.18 2.77 0.41 o z.6 Oct 1.60 2.71 -1.11 � Nov 1.51 2.57 -1.06 � m Dec 1.40 2.35 -0.95 r 1.7 Jan09 1.26 2.05 -0.79 Feb 1.29 1.87 -0.58 0.8 Mar 1.07 1.82 -0.75 Jun08 Jul Aug Sep Oct Nov DecJan09Feb Mar Apr May Apr 1.05 1.61 -0.56 May 1.06 1.53 -0.47 aLAIF Yield ■RDA Yield * Standard and Poors ""` LAIF Page 6 Palm Desert Redevelopment Agency Portfolio Holdings May 31, 2009 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Medium-Term Notes $ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,011,470 4.76 101.16 $ 3,034,752 Aa2 AA $ 3,000,000 WAL-MART 4.13 7/1/10 $ 3,037,868 2.91 102.87 $ 3,086,031 Aa2 AA $ 13,625,000 WELLS FARGO BANK 4.20 1/15/10 $ 13,723,086 3.00 101.31 $ 13,803,733 A1 AA $ 19,625,000 Subtotal $ 19,772,424 3.25 $ 19,924,516 Federal Agencies--Coupon $ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,009,935 4.88 102.15 $ 2,043,056 Aaa AAA $ 2,000,000 FED FARM CREDIT BANK 4.75 8/3/09 $ 1,999,623 4.87 100.78 $ 2,015,626 Aaa AAA $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,915,349 4.65 105.34 $ 5,161,846 Aaa AAA $ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,494,365 5.59 101.13 $ 4,550,625 Aaa AAA $ 2,005,000 FED HOME LOAN BANK 3.88 7/24/09 $ 2,002,275 4.89 100.53 $ 2,015,653 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,979,477 5.49 106.75 $ 2,135,000 Aaa AAA $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,979,204 5.50 106.75 $ 2,135,000 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,030,295 5.54 107.38 $ 2,147,500 Aaa AAA �$ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,790,665 5.54 107.38 $ 4,009,383 Aaa AAA $ 4,155,000 FED NATIONAL MTG ASSOC 6.63 9/15/09 $ 4,173,851 4.89 101.78 $ 4,229,013 Aaa AAA ,$ 29,294,000 Subtotal $ 29,375,039 5.16 $ 30,442,701 Local Government Investment Pool $ 39,997,687 L.A.I.F. 0.00 6/1/09 $ 39,997,687 1.61 100.00 $ 39,997,687 U U $ 21,894 L.A.I.F. (HOUSING) 0.00 6/1/09 $ 21,894 1.61 100.00 $ 21,894 U U $ 40,019,580 Subtotal $ 40,019,580 1.61 $ 40,019,580 Local Government Investment Pool $ 51,537,259 C.A.M.P. 0.00 6/1/09 $ 51,537,259 0.60 100.00 $ 51,537,259 U AAA $ 2,106,152 C.A.M.P.(HOUSING) 0.00 6/1/09 $ 2,106,152 0.60 100.00 $ 2,106,152 U AAA $ 53,643,412 Subtotal $ 53,643,412 0.60 $ 53,643,412 Money Market Fund $ 150,076,634 WF TREASURY PLUS 0.00 6/1/09 $ 150,076,634 0.00 100.00 $ 150,076,634 Aaa AAA $ 150,076,634 Subtotal $ 150,076,634 0.00 $ 150,076,634 Total Investments $ 292,658,626 $ 292,887,089 1.06 $ 294,106,843 Cash $ 435,183 HOUSING AUTH CHKG 0.00 6/1/09 $ 435,183 0.00 100.00 $ 435,183 U U $ 397,866 HOUSING AUTH TRUST 0.00 6/1/09 $ 397,866 0.00 100.00 $ 397,866 U U $ 833,049 Subtotal $ 833,049 $ 833,049 "U"= Unrated Page 7 Palm Desert Redevelopment Agency Portfolio Holdings May 31, 2009 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P Total Investments and Cash $ 293,491,675 $ 293,720,138 $ 294,939,892 %of Portfolio Corporate Issuers (Market Value) WAL-MART 2.08% WELLS FARGO BANK 4.68°/a %of Portfolio Agency Issuers (Market Value) FED FARM CREDIT BANK 3.13% FED HOME LOAN BANK 3.67% FED HOME LOAN MTG CORP 2.09% FED NATIONAL MTG ASSOC 1.43°/a "U"= Unrated Page 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 Audit, Investment, and Finance Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended May 31,2009,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. Interactive Data Corporation provided the data that was 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 June 23,2009, ��s �� c.c.,�r � City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS � California Government Code City Investment Policy CA Govt Maximum Maximum Quality Maximum Maximum Quality %of Ciry %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) 53632(c) Savin s Accounts No Limit No Limit No Limit No Limit 14.1% 0.0% 53601(b U.S.Treasuries 5 Years No Limit 5 Years No Limit 0.0% 0.0% 53601(c) CA State Debt 5 Years No Limit Not Aufhorized 53601(d) CA Local Agency Debt 5 Years No Limit Not Authorized 53601(e) Federal Agencies 5 Years No Limit 5 Years 30% 6% 11.7% 10.0% 53601 Bankers's Acceptances 180 Days 40% 180 Days 40% A-1 &P-1 - - 53601 Commercial Paper 270 Da s 25% A-1+or P-1 270 Days 25% A-1+or P-1 0.0% 0.0% 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% NotAuthorized 53601 ') Medium-Term Notes 5 Years 30% A 5 Years 30% A 15.0% 6.8% 53601 k) Mutual Funds 90 Days 20% AAA&Aaa 90 Days 20%(2) AAA&Aaa 15.1% 51.2% 53601(I) Trust Indenture Debt NotAufhorized 53601(m) Secured Bank Deposits 5 Years No Limit NotAufhorized 53601(k) Local Government AAA&Aaa AAA&Aaa Investment Pools 90 Days 20% or Advisor 90 Days 20% (2) or Advisor 16.6% 18.3% 53601(n) Mortgage-Backed 5 Years 20% A(Issuer)& NotAuthorized Securities AA(Security 16429.1(b) LAIF No Limit No Limit 16.9% 13.7% (1) The City loan to RDA,which is not a bond, has been approved by the Palm Desert City Council. 89.4% 100.0% " (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. * Certified California Municipal Treasurer Page 9