HomeMy WebLinkAboutInvestment Report - NOV 08 ` City of Palm Desert �„�.,.,., ,._,,,�
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Ci#y and Redevelopment Ager�+cy Portfolios
Gf�MPI.IANCE ANALYSIS AND INVESTMENT REPORT
November 2008
Paul S. Gibson, C.C.M.T., Treasurer
. Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer
Treasurer's Commentary
On December 16, the Federal Open Market Committee (FOMC)cut the Federal Funds Rate by 75 basis points to a "floating
target range" of 0 --0.25%. The Fed/Treasury has dramatically increased the money supply in an effort to use inflation to lift
the country out of recession.This policy is being undermined by consumers and banks who are hoarding cash. The FOMC
is trying to stimulate consumer spending by cutting short-term interest rates to virtually zero. This is unlikely to work,
however, and may undermine the profitability of money market funds.
The economic news is not good. The U.S. economy lost 533,000 jobs in November--the worst decline since 1974.
November Retail Sales were the worst since 1969. The stock market has had its worst year since 1931. Four-week U.S.
Treasury bills were recently sold with a zero vield. The National Bureau of Economic Research declared that the U.S.
economy has been in recession since December 2007.The California housing market is not expected to recover until 2012.
The U.S. Government rescued Citigroup from collapse. The U.S. Treasury created the Debt Guarantee Program so that
financial institutions could issue unsecured debt with the"full faith and credit of the United States". Ultimately, Chrysler,
Genera� Motors, and Ford will probably file Chapter 11 bankruptcies, and reorganize with Federal financial assistance. The
Big Three are burdened with uncompetitive union contracts, legacy healthcare and pension liabilities, and high debt loads.
�There is no likelihood of a recovery of domestic auto demand in the near term.
��s G�� c.c.�r.
City Treasurer
PORTFOLIO STATISTICS
Dollars in Thousands
NOV-08 OCT-08 SEP-08 AUG-08 JUL-08 JUN-08
CITY
Month-End Book Value'�* $ 213,607 $ 217,630 $ 211,223 $ 220,438 $ 222,674 $ 231,179
Month-End Market Value""" $ 213,168 $ 216,626 $ 224,865 $ 221,338 $ 223,460 $ 232,273
Paper Gain(Loss) $ (439) $ (1,004) $ 13,642 $ 900 $ 786 $ 1,094
Prior Year Book Variance $ (27,138) $ (26,483) $ (23,021) $ (25,412) $ (33,469) $ (11,919)
Interest Earnings $ 529 $ 575 $ 647 $ 665 $ 688 $ 689
Yield-To-Maturity 3.04% 3.27% 3.70% 3.65% 3.69% 3.75%
Weighted Maturity(Days) 463 470 489 490 500 503
Effective Duration 0.53 0.55 0.58 0.63 0.65 0.68
RDA
Month-End Book Value*"* $ 244,674 $ 245,100 $ 257,385 $ 284,134 $ 288,987 $ 285,360
Month-End Market Value*** $ 245,564 $ 245,429 $ 257,654 $ 284,962 $ 289,777 $ 286,216
Paper Gain(Loss) $ 890 $ 329 $ 269 $ 828 $ 790 $ 856
Prior Year Book Variance $ (5,516) $ (5,663) $ (16,289) $ (5,730) $ (4,039) $ (17,349)
Interest Earnings $ 304 $ 325 $ 718 $ 727 $ 748 $ 744
Yield-To-Matu�lty 1.51% 1.60% 3.18% 3.05% 3.08% 3.09%
Weighted Maturity(Days) 272 272 259 275 277 280
Effective Duration 0.26 0.28 0.29 0.28 0.30 0.32
"** Omits SLGSs.
City of Palm Desert-- Portfolio Characteristics
_ November 30, 2008
Dollars in Thousands
Aaeinq Interval Market Value
< 1 M $ gg,218 General Fund Ageing
<2M -
<3M 5,979 100
�6M - �., 80
< 1YR 16,387 0
<2YR 52,792 0 60 45
34
< 3YR 9,820 � 40
<4YR - a° 11
<5YR - 20 � 4 0 6 0 0 0
0
> 5YR -
Total: $ 154,196 <1 M <2M <3M <6M <1 YR<2YR<3YR<4YR<5YR>5YR
Ratin s* Market Value Credit Quality
qqq $ 147,243 qqq
qq 13,203 Unrated" 71%
q 5,032 21%
Unrated** 42,769 A qq
Total: $ 208,247 2/0 6%
Sector Market Value Asset Allocation MTNs
28%
'MMF $ 35,623
Agencies 27,835
MTNs 59,125 Agencies CAM P
CAMP 42,895 13% 23%
RDA Loan 22,655
GMRA 20,100 MMF
LAI F �4 ��% RDA Loan
CP - GMRA 11%
Total: $ 208,247 10%
Month Citv Yield LAIF Yield Variance Performance
Dec 4.87 4.80 0.07
Jan08 4.72 4.62 0.10
Feb 4.31 4.16 0.15 4�8
Mar 4.05 3.78 0.27
Apr 3.98 3.40 0.58 a 4.0
May 3.88 3.07 0.81 �-�,
Jun 3.75 2.89 0.86 } 3.2
Jul 3.69 2.88 0.82
Aug 3.65 2.78 0.87 2.4
Sep 3.70 2.77 0.93 DecJan08Feb Mar Apr May Jun Jul Aug Sep Oct Nov
Oct 3.27 2.71 0.56
Nov 3.04 2.57 0.47 ■[.�.��� e��>�<7 ■c,'� 7'�,��'
" Standard and Poors
_ "* LAIF, and City Loan to RDA Page 2
City of Palm Desert
Portfolio Holdings
November 30, 2008
Market Ratings
Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's Ratings
Medium-Term Notes
$ 2,920,000 BANK OF AMERICA 5.88 2/15/09 $ 2,924,819 5.01 100.03 $ 2,920,823 Aa2 AA-
$ 3,795,000 BANK OF AMERICA 5.38 8/15/11 $ 3,920,723 4.05 98.97 $ 3,755,904 Aa2 AA-
$ 3,000,000 BANK OF AMERICA 4.25 10/1/10 $ 3,054,957 3.20 98.63 $ 2,958,975 Aa2 AA-
$ 15,270,000 CITIGROUP 4.13 2/22/10 $ 15,133,346 4.91 95.70 $ 14,612,900 Aa1 AA
$ 2,035,000 CITIGROUP 4.13 2/22/10 $ 2,016,788 4.91 95.70 $ 1,947,430 Aa1 AA
$ 1,000,000 CITIGROUP 4.63 8/3/10 $ 991,320 5.19 95.35 $ 953,550 Aa1 AA
$ 4,000,000 CITIGROUP 4.63 8/3/10 $ 3,965,278 5.19 95.35 $ 3,814,200 Aa1 AA
$ 2,035,000 GENERAL ELECTRIC 4.88 10/21/10 $ 2,009,454 5.63 99.45 $ 2,023,889 Aaa AAA
$ 1,891,000 GENERAL ELECTRIC 6.88 11/15/10 $ 1,930,589 5.65 102.73 $ 1,942,534 Aaa AAA
$ 2,000,000 GENERAL ELECTRIC 6.13 2/22/11 $ 2,017,717 5.67 100.84 $ 2,016,862 Aaa AAA
$ 3,965,000 GENERAL ELECTRIC 4.88 10/21/10 $ 4,082,073 3.23 99.45 $ 3,943,351 Aaa AAA
$ 3,080,000 WACHOVIA 3.63 2/17/09 $ 3,071,534 5.02 99.29 $ 3,057,994 Aa3 A+
$ 2,000,000 WACHOVIA 7.80 8/18/10 $ 2,087,460 5.02 98.69 $ 1,973,772 Aa3 A+
$ 2,000,000 WAL-MART 6.88 8/10/09 $ 2,024,438 4.93 102.84 $ 2,056,778 Aa2 AA
$ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,080,172 2.90 102.84 $ 3,085,167 Aa2 AA
$ 4,000,000 WELLS FARGO BANK 6.38 8/1/11 $ 4,117,276 5.13 101.19 $ 4,047,576 Aa1 AA-
_ $ 2,000,000 WELLS FARGO BANK 4.63 8/9/10 $ 1,985,770 5.09 100.18 $ 2,003,670 Aa1 AA-
$ 2,020,000 WELLS FARGO BANK 4.20 1/15/10 $ 2,003,736 4.96 99.49 $ 2,009,678 Aa1 AA-
$ 60,011,000 Subtotal $ 60,417,450 4.69 $ 59,125,052
Federal Agencies--Coupon
$ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,006,644 4.61 103.88 $ 3,116,250 Aaa AAA
$ 3,000,000 FED FARM CREDIT BANK 4.78 5/3/10 $ 3,006,644 4.61 103.88 $ 3,116,250 Aaa AAA
$ 3,000,000 FED HOME LOAN BANK 4.38 9/11/09 $ 2,989,482 5.59 102.09 $ 3,062,813 Aaa AAA
$ 1,980,000 FED HOME LOAN BANK 4.75 12/12/08 $ 1,979,924 4.87 100.13 $ 1,982,475 Aaa AAA
$ 2,000,000 FED HOME LOAN BANK 3.50 11/3/09 $ 1,957,896 5.96 101.38 $ 2,027,500 Aaa AAA
$ 2,033,000 FED HOME LOAN MTG CORP 4.25 7/15/09 $ 2,025,858 4.87 101.75 $ 2,068,578 Aaa AAA
$ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,032,338 4.87 101.97 $ 2,089,340 Aaa AAA
$ 2,000,000 FED HOME LOAN MTG CORP 4.13 11/18/09 $ 1,986,819 4.88 101.92 $ 2,038,314 Aaa AAA
$ 2,062,000 FED HOME LOAN MTG CORP 4.13 7/12/10 $ 2,020,347 5.47 103.22 $ 2,128,371 Aaa AAA
$ 2,049,000 FED HOME LOAN MTG CORP 4.00 12/15/09 $ 2,019,192 5.50 101.97 $ 2,089,340 Aaa AAA
$ 2,000,000 FED NATIONAL MTG ASSOC 4.63 10/28/09 $ 1,995,773 4.88 102.38 $ 2,047,500 Aaa AAA
$ 2,000,000 FED NATIONAL MTG ASSOC 4.25 8/15/10 $ 1,961,374 5.47 103.44 $ 2,068,750 Aaa AAA
$ 27,173,000 Subtotal $ 26,982,290 5.11 $ 27,835,479
Local Government Investment Pool
$ 14,155 L.A.I.F. 0.00 12/1/08 $ 14,155 2.57 100.00 $ 14,155 U U
$ 14,155 Subtotal $ 14,155 2.57 $ 14,155
"U"= Un�ated Page 3
City of Palm Desert
Portfolio Holdings
November 30, 2008
Market Ratings
Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's Ratings
Local Government Investment Pool
$ 42,239,081 C.A.M.P. 0.00 12/1/08 $ 42,239,081 2.32 100.00 $ 42,239,081 U AAA
$ 656,249 C.A.M.P.(DESERT WILLOW) 0.00 12/1/08 $ 656,249 2.32 100.00 $ 656,249 U AAA
$ 42,895,330 Subtotal $ 42,895,330 2.32 $ 42,895,330
Money Market Fund
$ 35,623,198 WF TREASURY PLUS 0.00 12/1/08 $ 35,623,198 0.17 100.00 $ 35,623,198 Aaa AAA
$ 35,623,198 Subtotal $ 35,623,198 0.17 $ 35,623,198
Government Manged Rate Account
$ 20,099,598 UNION BANK 0.00 12/1/08 $ 20,099,598 2.43 100.00 $ 20,099,598 U U
$ 20,099,598 Subtotal $ 20,099,598 2.43 $ 20,099,598
City of Palm Desert
$ 22,655,000 CITY OF PALM DESERT 0.00 12/1/38 $ 22,655,000 2.57 100.00 $ 22,655,000 U U
$ 22,655,000 Subtotal $ 22,655,000 2.57 $ 22,655,000
�Total Investments
$ 208,471,282 $ 208,687,022 3.04 $ 208,247,813
Cash
$ 3,831,513 CITY MAIN CHKG 0.00 12/1/08 $ 3,831,513 0.00 100.00 $ 3,831,513 U U
$ 856,000 DESERT WILLOW CHKG 0.00 12/1/08 $ 856,000 0.00 100.00 $ 856,000 U U
$ 232,280 RECREATIONAL FAC CHKG 0.00 12/1/08 $ 232,280 0.00 100.00 $ 232,280 U U
$ - ART, FOOD&WINE CHKG 0.00 12/1/08 $ - 0.00 100.00 $ - U U
$ - MONTEREY 170 CHKG 0.00 12/1/08 $ - 0.00 100.00 $ - U U
$ 4,919,794 Subtotal $ 4,919,794 $ 4,919,794
Total Investments and Cash
$ 213,391,075 $ 213,606,815 $ 213,167,606
"U"= Unrated Page 4
City of Palm Desert
Portfolio Holdings
November 30, 2008
Market Ratings
Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's Ratings
%of Portfolio
Corporate Issuers (Market Value)
BANK OF AMERICA 4.52%
CITIGROUP 10.01°/a
GENERAL ELECTRIC 4.66%
WACHOVIA 2.36%
WAL-MART 2.41%
WELLS FARGO BANK 3.78%
%of Portfolio
Agency Issuers (Market Value)
FED FARM CREDIT BANK 2.92%
FED HOME LOAN BANK 3.32%
FED HOME LOAN MTG CORP 4.89%
FED NATIONAL MTG ASSOC 1.93%
"U"= Unrated Page 5
Palm Desert Redevelopment Agency-- Portfolio Characteristics
• November 30, 2008
Dollars in Thousands
Aqeinq Interval Market Value portfolio Ageing w/o SLGSs
< 1M $ 21,101
<2M 2,999
<3M - 100 ----
<6M 11,074 90
80
< 1YR 18,149 0 70
<2YR 27,905 0 60
50 33
<3YR 4,208 0 30 25 21
<4YR a 20 13
<5YR - 10 4 0 5 0 0 0
0
>5YR - <1 M <2M <3M <6M <1 YR<2YR<3YR<4YR<5YR>5YR
Total: $ 85,436
Quality" Market Value Credit Quality
AAA $ 208,586 �
AA 23,644 85%
A 12,114
Unrated'* 32 A
Total: $ 244,376 5% 10%
Sector Market Value Asset Allocation
' MMF $ 156,788
Agencies 30,577 MMF
MTNs 35,757 64%
CAMP 21,222
LAI F 32 Agencies
C P - CAM P �2%
Treasuries - 9% MTNs
Total: $ 244,376 �5%
Month RDA Yield LAIF Yield Variance Performance
Dec 4.70 4.80 -0.10
Jan08 4.45 4.62 -0.17 5.0
Feb 3.78 4.16 -0.38
Mar 3.36 3.78 -0.42 4.0
Apr 3.35 3.40 -0.05 0
May 3.14 3.07 0.06 � 3.0
m
Jun 3.09 2.89 0.20 } 2.0
Jul 3.08 2.79 0.29
Aug 3.05 2.78 0•27 1.0
Sep 3.18 2.77 0.41 Dec Jan08 Feb Mar Apr May Jun Jul Aug Sep Oct Nov
Oct 1.60 2.71 -1.11
NOv 1.51 2.57 -1.06 ■LAIF Yield ■RDA Yield
* Standard and Poors
. ""' LAIF Page 6
Palm Desert Redevelopment Agency
Portfolio Holdings
November 30, 2008
Market Ratings
Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S&P
Medium-Term Notes
$ 4,000,000 CITIGROUP 6.20 3/15/09 $ 4,011,546 5.13 98.98 $ 3,959,268 Aa1 AA-
$ 4,070,000 JP MORGAN CHASE 3.50 3/15/09 $ 4,052,137 5.12 99.86 $ 4,064,103 Aa3 A+
$ 3,055,000 JP MORGAN CHASE 3.50 3/15/09 $ 3,041,592 5.12 99.86 $ 3,050,573 Aa3 A+
$ 3,000,000 JP MORGAN CHASE 6.00 1/15/09 $ 3,010,760 3.00 99.96 $ 2,998,872 Aa3 A+
$ 2,000,000 WACHOVIA 5.80 12/1/08 $ 2,000,000 5.00 100.00 $ 2,000,000 Aa3 A+
$ 3,000,000 WAL-MART 6.88 8/10/09 $ 3,041,392 4.76 102.84 $ 3,085,167 Aa2 AA
$ 3,000,000 WAL-MART 4.13 7/1/10 $ 3,055,345 2.91 101.46 $ 3,043,698 Aa2 AA
$ 13,625,000 WELLS FARGO BANK 4.20 1/15/10 $ 13,801,905 3.00 99.49 $ 13,555,376 Aa1 AA-
$ 35,750,000 Subtotal $ 36,014,677 3.91 $ 35,757,057
Federal Agencies--Coupon
$ 2,000,000 FED FARM CREDIT BANK 6.45 10/7/09 $ 2,024,127 4.88 103.92 $ 2,078,392 Aaa AAA
$ 2,000,000 FED FARM CREDIT BANK 4.75 8/3/09 $ 1,998,527 4.87 102.22 $ 2,044,375 Aaa AAA
. $ 4,900,000 FED FARM CREDIT BANK 4.90 9/22/10 $ 4,921,215 4.65 104.53 $ 5,122,031 Aaa AAA
$ 4,500,000 FED HOME LOAN BANK 4.38 9/11/09 $ 4,484,223 5.59 102.09 $ 4,594,219 Aaa AAA
$ 2,005,000 FED HOME LOAN BANK 3.88 7/24/09 $ 1,993,021 4.89 101.53 $ 2,035,702 Aaa AAA
� $ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,973,705 5.49 105.19 $ 2,103,750 Aaa AAA
$ 2,000,000 FED HOME LOAN BANK 4.88 3/11/11 $ 1,973,355 5.50 105.19 $ 2,103,750 Aaa AAA
$ 2,000,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 2,042,048 5.54 107.84 $ 2,156,875 Aaa AAA
$ 3,734,000 FED HOME LOAN MTG CORP 6.88 9/15/10 $ 3,812,647 5.54 107.84 $ 4,026,886 Aaa AAA
$ 4,155,000 FED NATIONAL MTG ASSOC 6.63 9/15/09 $ 4,206,478 4.89 103.75 $ 4,310,813 Aaa AAA
$ 29,294,000 Subtotal $ 29,429,346 5.16 $ 30,576,792
Local Government Investment Pool
$ 21,653 L.A.I.F. 0.00 12/1/08 $ 21,653 2.57 100.00 $ 21,653 U U
$ 9,893 L.A.I.F.(HOUSING) 0.00 12/1/08 $ 9,893 2.57 100.00 $ 9,893 U U
$ 31,546 Subtotal $ 31,546 2.57 $ 31,546
Local Government Investment Pool
$ 19,127,023 C.A.M.P. 0.00 12/1/08 $ 19,127,023 2.32 100.00 $ 19,127,023 U AAA
$ 2,095,254 C.A.M.P. (HOUSING) 0.00 12/1/08 $ 2,095,254 2.32 100.00 $ 2,095,254 U AAA
$ 21,222,277 Subtotal $ 21,222,277 2.32 $ 21,222,277
Money Market Fund
$ 156,787,972 WF TREASURY PLUS 0.00 12/1/08 $ 156,787,972 0.17 100.00 $ 156,787,972 Aaa AAA
$ 156,787,972 Subtotal $ 156,787,972 0.17 $ 156,787,972
Total Investments
$ 243,085,795 $ 243,485,818 1.51 $ 244,375,644
"U"= Unrated Page 7
Palm Desert Redevelopment Agency
Portfolio Holdings
November 30, 2008
Market Ratings
Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S8�P
%of Portfolio
Corporate Issuers (Market Value)
CITIGROUP 1.61°/a
JP MORGAN CHASE 4.12%
WACHOVIA 0.81%
WAL-MART 2.50%
WELLS FARGO BANK 5.52%
%of Portfolio
Agency Issuers (Market Value)
FED FARM CREDIT BANK 3.76%
FED HOME LOAN BANK 4.41%
FED HOME LOAN MTG CORP 2.52%
FED NATIONAL MTG ASSOC 1.76%
"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 November 30, 2008,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 December 23,2008,
��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 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 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 NofAuthorized
53601(e) Federal Agencies 5 Years No Limit 5 Years 30°/a 6% 12.9% 12.1%
53601(fl Bankers's Acceptances 180 Days 40% 180 Days 40% A-1 &P-1 - -
53601 Commercial Paper 270 Days 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% Not Authorized
53601Q) Medium-Term Notes 5 Years 30% A 5 Years 30% A 29.0% 14.8%
53601(k) Mutual Funds 90 Days 20% AAA&Aaa 90 Days 20% (2) AAA&Aaa 17.1% 64.4%
53601(I) Trust Indenture Debt NotAufhorized
53601(m) Secured Bank Deposits 5 Years No Limit NotAuthorized
53601(k) Local Government AAA&Aaa AAA&Aaa
Investment Pools 90 Days 20% or Advisor 90 Days 20% (2) or Advisor 20.6% 8.7%
53601(n) Mortgage-Backed 5 Years 20% A(Issuer)& NotAuthorized
Securities AA(Security
LAIF No Limit No Limit 0.0% 0.0%
(1) The City loan to RDA,which is not a bond, has been approved by the Palm Desert City Council. 79.5% 100.0%
• (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds.
� ' Certified California Municipa/Treasurer Page 9