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HomeMy WebLinkAboutInvestment Report - March 2012 - Joint ConsiderationCITY OF PALM DESERT FINANCE DEPARTMENT INTEROFFICE MEMORANDUM TO: RACHELLE KLASSEN, CITY CLERK FROM: NIAMH ORTEGA, RECORDING SECRETARYOV-) DATE: APRIL 24, 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 March 2012. Please include the report on the upcoming agenda for review and acceptance by City Council. Also included are the Minutes of the March 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 RECEIVED4- rrT OTHER MEETIANG DATE AYES: NOES: ti' "Oc. ABSENT:_NDI ee- ABSTAIN: N, /' VERIFIED BY: rc3 Original on File with City Clerk's Oftice r-BY SA -RDA (5 GAFINANCE\NIAMH ORTEGA\INVESTMENT COMM ITTEE\MEMOS\RKLASSENINVREPORT.WPD ECONOMIC COMMENTARY PIMCO, the world's largest bond fund, is forecasting that the global economy will grow by 1%-1.5% in 2012, with substantial downside risk if Europe's debt problems broaden into a global crisis. Industrial production in many of the advanced economies has stalled, while growth in the developing economies has slowed. The advanced economies are expected to experience sluggish growth over the next few years due to fiscal consolidation and consumer deleveraging. PIMCO is forecasting that the eurozone economy will shrink by 1 %-1.5% in 2012, with significant risk of a deeper recession. The eurozone debt crisis has reignited, this time with Spain in recession with a rapidly deteriorating economic and financial position. Spanish government debt is being dumped, and stressed Spanish banks are leaning on the European Central Bank for support. Portugal's economy is also unraveling, and Greece recently admitted that that it will need a third bailout. Investors are fleeing to U.S. Treasuries for safety, driving down yields. PIMCO is forecasting that the U.S economy will grow by 0%-l% in 2012. Weak personal income growth will restrain private sector gains, and budget cuts will restrain public sector growth. According to Morgan Stanley, the U.S. is facing a fiscal tightening of unprecedented magnitude ("fiscal cliff') at the end of 2012, which could push it back into recession in 2013. The Federal Reserve is subsidizing U.S. Government debt, and keeping interest rates low by buying 61 % of all Treasury debt issued. Foreign purchases of U.S. Treasury debt have been gradually falling. Ymds o�*aa, eemy. , City Treasurer " Certified California Municipal Treasurer PORTFOLIO STATISTICS X�C 2012 I Markets Team City Treasurer Paul S. Gibson, C.C.M.T. Deputy City Treasurer Thomas W. Jeffrey. J.D., M.B.A. Investment Oblectives 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. Thousands of Dollars Month -End Book Value $ 210,603 $ 212,467 $ 230,400 $ 207,034 $ 193,616 $ 195,884 Month -End Market Value $ 210,643 $ 212,494 $ 230,415 $ 207,034 $ 193,635 $ 195,904 Paper Gain (Loss) $ 40 $ 27 $ 15 $ - $ 19 $ 20 Prior Year Book Variance $ 3,948 $ 17,031 $ 38,780 $ 20,123 $ (7,765) $ 3,188 Interest Earnings $ 74 $ 68 $ 68 $ 64 $ 68 $ 70 Yield -To -Maturity 0.45% 0.41 % 0.40% 0.37% 0.44% 0.43% Weighted Maturity (Days) 39 39 39 16 30 14 Effective Duration 0.06 0.07 0.07 0.05 0.05 0.01 All data as of March 31, 2012 Dollars in Thousands Maturities Market Value < 1 M $ 154,425 < 2M - < 3M - < 6M - < 1Y 3,012 < 2Y 8,777 < 3Y - < 4Y - < 5Y - Total: $ 166,214 Ratings Market Value AAA or Aaa $ 109,667 AA or Aa 4,714 A 4,063 Unrated 88,715 Total: $ 207,159 Assets County Pool LAIF LAIF/Bond Proceeds RDA Loan MTN CAMP WF/Bond Proceeds Agencies Total: Market Value 97,892 49,813 25,346 13,555 8,777 4,465 4,299 3,012 $ 207,159 PORTFOLIO CHARACTERISTICS March 2012 Month City Yield LAIF Yield Variance Apr11 0.76 0.59 0.17 May 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 Maturities Distribution 100 _.----- _._____...._.__.__..._.__...._.._ i I 80 0 0 60 �o 0 40 a 20 0 0 0 2 5 0 0 0 0 <11VI <2M <3M <6M <1Y 12Y <3Y <4Y <5Y Credit Quality AAA or Aaa 53% Unrated 43% AA or Aa A 2% 2% Asset Allocations County Pool LAIF 47% t 24 /o LAIF/Bond Proceeds Agencies 12% 2%WF/Bond RDA Loan ProceedsCAMP MTN 7% 2% 2% 4% Performance 0.8 •2 0.4 aD 0.0 Apr11 May Jun Jul Aug Sep Oct Nov Dec Jan12 Feb ®LAIF Yield GCityYield� CITY OF PALM DESERT TREASURER'S OFFICE PAGE 2 OF 3 STATEMENT OF COMPLIANCE March 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 March 31, 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, Yarws o*m, eemy. 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 1.5% 53601(f) Bankers's Acceptances 180 Days 40% 180 Days 40% A-1 or P-1 - 53601 Commercial Paper 270 Days 25% A-1/10-1 270 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% 1 - 53601(I) Reverse Repos 92 Days 20% Not Authorized 53601 ') Medium -Term Notes 5 Years 30% A 5 Years 30% 1 A 4.2% 53601(k) Money Market Funds 90 Days 20% AAA & Aaa 90 Days 20% 1 AAA & Aaa 2.1% 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 or Advisor 49.4% 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 36.3% (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. CITY OF PALM DESERT TREASURER'S OFFICE PAGE 3 0F 3 r W co N N -i cu to a m o a C �p o o2 as V 4 C m c (NO wwO w o 0^CO N N Cl CO M O CO O N O O O O O O O d O f0 .- N I Ol co O M 01 — — V I O 0 '42 N N tY O O N N O O N 0 c .- N N a a O O (MO p n cl r o In N r V Of pNp W N O m O ai t0 nN h N C O � r Y�'1 001 00 N n n 0 N M l0 M O O V M CA N O N CJ w m e►� t. W w0 M O W N 1� m N M m V O cMo rn n o = or o I� 0) O IQ N O Of v o m °D vi rn ? N M O CD cm, t0 m N M V CC o) N w N O) 1` a N n 00 I N O LaCDO M co m co co f0 OD m co to co V M Ia N M W) N N N LO O N Q~ ui (� W W O W Q Y3 j W ~ W W Q�Q a aNa W W W � E +. W U 0 O z O F7 U ~ � awi > 0 p aO } U Q OU W Z Z Z gz O O Z W N W �l{ �[i. 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