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HomeMy WebLinkAboutInvestment Report - April 2012 - Joint ConsiderationY-C CITY OF PALM DESERT FINANCE DEPARTMENT INTEROFFICE MEMORANDUM TO: RACHELLE KLASSEN, CITY CLERK FROM: NIAMH ORTEGA, RECORDING SECRETARYNYV-'-� DATE: JUNE 19, 2012 SUBJECT: COMPLIANCE ANALYSIS AND INVESTMENT REPORTS Please find attached the Compliance Analysis and Investment Report which were presented and approved at the recent meeting of the Audit, Investment and Finance Committee for the month of April 2012. Please include the report on the upcoming agenda for review and acceptance by City Council. Also included are the Minutes of the April 2012 meeting for acceptance by the City Council. Please feel free to contact me at Ext. 382 if you have any questions. Thank you. nmo Attachment (as noted) CITY COUNCIL ACTION APPROVED DENIED RECEIVED �1� OTHER MEETI G DATE AYF,S:L*a--,r)n,i n�, � NOES: L%UP ABSENT: LA-ne ABSTAIN: VERIFIED BY' hL I r Q Original on File with City Clerk's Ofiilde it ed EY SA -RDA ON.._. a C Orin hial on iftie wl--ix City t1 Er rs Offitc GARNANCE\NIAMH ORTEGA\INVESTMENT COMM ITTEE\MEMOS\RKLASSENINVREPORT.WPD Nr W d E N O � E N O M a o� - _ 0 ` o f O 0 IL Z3 CL Pli m n n rn n o o o N col M M O IR R N a co c M I cy m N .- sf 0 h Lq N 4 OMi O N O O 0 n O) N C� Il OOi G O O M w rn oo of ui of ai c - - C' c rn v o h w m w � C N M N � clc [O n cl 47 u'i N O) v m n cc N V O> f` 0 N n N O N rn 0 n W cl N M ^O o^p V N V N m O N V N N cn ccl O a0 I n N ui VLo ri o) c w r- N d O) O N W O O n m N 6 of 6 o vi o co � c n O m. n0 O N V� tN o O N w N N cn w O W t^. 2 ONi N N M m'T OD n N V O a W N V N IM N N N Z _ w y 1 Z Z O O w H v=i y i3 o N w Q w m E O OU W a � _U y ¢ a Z 0 Z m� o `p Z OU m o U' W Z ¢ W X F W 2 C i a) L q N O -1 yy J CL F O 0-1 of w OU d N N c �' o U LL OJ � E c U a'S IO- _a U a) cu t c to n d N al N NQ,� C D C CO ma `o— C ¢ m N C .4% a7 � m a) T a00 c a N E. 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N O O rn rn C c 7 Q M � N d 0 0 'L Oa } `- N Ci CL IL C o N N V ` � o0 a o a o c (D o°Do w A c am O of c 00 w Z LL, U 00 W N F � Z J �2 Q W LL O Z t7 C N J J O aCL � F¢ Ay p W m n w w O c N U 0 w Q A z 2 a y � A ik 0 U 4 U o ~ N a fD V N > c Z Cl)cl) o Y U W 2 U N Y b N Z O c O m O M O n Z O O O Q d 0 M! M ry o U 0) U) U .M1 SZn� ,L'j�h'• City ,f Palm Desert xeadr�ixex G �nae6t�rneni �rt ECONOMIC COMMENTARY A chaotic Greek exit from the euro may occur by late summer. The Germans expect this, and believe that the damage can be contained. Europe is America's largest export market (20%), and the banking systems of both are intertwined. The $16 trillion U.S. deficit exceeds the combined deficits of the five most -troubled eurozone members. The U.S. deficit is so staggering that it cannot be paid off by raising taxes and/or by severely slashing entitlement programs that are politically untouchable. Consequently, the Federal Reserve must "print money" (quantitative easings) so that the U.S. can pay its creditors with devalued dollars (soft default). Hyperinflation may pose a threat to the U.S. economy, starting in 2014. If a third round of quantitative easing occurs in 2012 (an election year), it may trigger the dumping of U.S. dollars abroad. With a severely devalued dollar, U.S. imports would be prohibitively expensive (the U.S. is now a net importer). An expanded money supply, and a shortage of domestically produced goods (due to the offshoring of U.S. manufacturing) could promote hyperinflation. The global abandonment of the U.S. dollar has already begun. Since 2009, China and Russia have refused to use dollars in bilateral trade agreements with other countries. By 2016, China will have the world's largest economy (IMF). By 2021, the Chinese yuan is expected to be the new global reserve currency. Once the yuan is fully convertible, nations will be selling dollars to acquire yuan reserves. MW(S. Okew, t' cC ,ffj_. " City Treasurer Certified California Municipal Treasurer PORTFOLIO STATISTICS 2012 4111-tv i nnarKets i eam City Treasurer Paul S. Gibson, C.C.M.T. Deputy City Treasurer Thomas W. Jeffrey, J.D.. M.B.A. investment UD The treasurer shall invest all public monies in a manner that ensures safety of principal; sufficient liquidity to finance the City's expenditures; and the highest yield possible after the previous two objectives have been met. STATISTICS .. .- Thousands of Dollars Month -End Book Value $ 210,198 $ 210,603 $ 212,467 $ 230,400 $ 207,034 $ 193,616 Month -End Market Value $ 210,229 $ 210,643 $ 212,494 $ 230,415 $ 207,034 $ 193,635 Paper Gain (Loss) $ 31 $ 40 $ 27 $ 15 $ - $ 19 Prior Year Book Variance $ 3,543 $ 3,948 $ 17,031 $ 38,780 $ 20,123 $ (7,765) Interest Earnings $ 72 $ 74 $ 68 $ 68 $ 64 $ 68 Yield -To -Maturity 0.42% 0.45% 0.41 % 0.40% 0.37% 0.44% Weighted Maturity (Days) 39 39 39 39 16 30 Effective Duration 0.06 0.06 0.07 0.07 0.05 0.05 All data as of April 30, 2012 PORTFOLIO CHARACTERISTICS April 2012 Dollars in Thousands Maturities Market Value < 1 M $ 182,585 < 2M - < 3M - < 6M 3,012 < 1Y - < 2Y 8,777 < 3Y - < 4Y - < 5Y - Total: $ 194,374 Ratings Market Value AAA or Aaa $ 110,369 AA or Aa 4,713 A 4,052 Unrated 88,781 Total: $ 207,915 Assets Market Value County Pool 97,923 LAIF 49,860 WF/LAIF Bond Proceeds 25,365 City Loan to RDA 13,555 MTN 8,765 CAMP 5,266 WF/Bond Proceeds 4,172 Agencies 3,009 Total: $ 207,915 Maturities Distribution 100 80 e 0 60 0 40 0 a. 20 0 Month City Yield LAIF Yield Variance May11 0.71 0.41 0.30 Jun 0.72 0.45 0.27 Jul 0.67 0.38 0.29 Aug 0.49 0.41 0.08 Sep 0.49 0.41 0.08 Oct 0.43 0.39 0.05 Nov 0.44 0.40 0.04 Dec 0.37 0.38 -0.01 Jan12 0.40 0.39 0.01 Feb 0.41 0.39 0.02 Mar 0.45 0.38 0.07 Apr 0.42 0.37 0.05 0 0 2 0 5 0 0 0 M <2M <3M <W <1Y <2Y <3Y <4Y < Credit Quality AAA or Aaa 53% Unrated AA or Aa 43% A 2% 2% Asset Allocation County Pool LAIF 47% 24% WF/LAIF Bond Proceeds Agencies 12% 1%WFBond City Loan to Proceeds CAMP MTN RDA 2% 3% 4% 7% CITY OF PALM DESERT TREASURER'S OFFICE PAGE 2 OF 3 STATEMENT OF COMPLIANCE April 2012 The investment of the City of Palm Desert securities portfolio is governed by California Government Code Section 53601 and by the Palm Desert Statement of Investment Policy. The City investment policy is more conservative than State law. The Palm Desert Audit, Finance, and Investment Committee, and the Palm Desert City Council review the City investment policy annually. For the month ended April 30, 2012, the City investment portfolio was in compliance with all applicable state and local laws and regulations. The City Treasurer's Office continued to pursue conservative and prudent investment strategies, based upon the stated objectives of safety, liquidity, and yield. Barring unforeseen events, the City Treasury should have sufficient cash to finance City expenditures for the next six months. In addition, portions of the City investment portfolio could be liquidated in order to meet any significant, unexpected cash requirements. Interactive Data Services provided the market value prices for securities in the City investment portfolio. All balances are bank balances. Respectfully submitted, Ywds woea, ee.my. City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS California Government Code City Investment Policy CA Govt Maximum Maximum Minimum Maximum Maximum Minimum % of City Code Investment Category Maturity Limit Quality Maturity Limit Quality Portfolio 53601(a) Palm Desert Bonds 5 Years No Limit - 53632(c) Savings Accounts No Limit No Limit No Limit No Limit - 53601(b) U.S. Treasuries 5 Years No Limit 5 Years No Limit - 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 No Limit 1.4% 53601(f) Bankers's Acceptances 180 Days 40% 180 Days 40% A-1 or P-1 - 53601(g) Commercial Paper 270 Days 25% A-1/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% - 53601(I) Reverse Repos 92 Days 20% Not Authorized 53601(j) Medium -Term Notes 5 Years 30% A 5 Years 30% A 4.2% 53601(k) Money Market Funds 90 Days 20% AAA & Aaa 90 Days 20% AAA & Aaa 2.0% 53601(I) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) Local Government Investment Pools 90 Days No Limit AAA & Aaa or Advisor 90 Days 50% (1) AAA & Aaa 1 or Advisor 49.6% 53601(n) Mortgage -Backed Securities 5 Years 20% A (Issuer) & AA (Security) Not Authorized 16429.1(b) L.A.I.F. No Limit $50MM/Acct No Limit $50MM/Acct 36.2% (2)1 93.5% Footnotes: (1) Maximum concentration limit for local agency investment pools, excluding bond proceeds. (2) Total does not include the City Loan to RDA.