HomeMy WebLinkAboutCompliance Analysis & Investment Reports - February 2005CITY OF PALM DESERT
FINANCE DEPARTMENT
INTEROFFICE MEMORANDUM
TO: RACHELLE KLASSEN, CITY CLERK
FROM: NIAMH ORTEGA, RECORDING SECRETARY��
DATE: MARCH 24, 2005
SUBJECT: COMPLIANCE ANALYSIS AND INVESTMENT REPORTS
Please find attached the Compliance Analysis and Investment Reports for
2005 which were presented and approved at the meeting of March 23, 2005. Please
include on the upcoming agenda for review and acceptance by City Council.
Please feel free to contact me at Ext. 382 if you have any questions. Thank you.
nmo
Attachment (as noted)
G:Tinanceftamh OrtegatWpdocsllnvestment Comm ttee\Memos\rklasseninvreportO12605.wpd
City of Pa/m desert
City and Redevelopment Agency Portfolios
COMPLIANtt-ANAL A
February 2005
i '__ _ _ _ — .eafNS�9LY.•v •• _—..
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 (FOMC) will next meet on March 22nd. Another 25 basis -point increase in the Federal
Funds Rate, from 2.50% to 2.75%, is a certainty. The latest estimate is that the Federal Funds Rate will be at 4.00% by
year-end. The FOMC is concerned about inflation prospects in 2006, as well as cheap money fueling bubbles in housing and
other assets. Productivity growth is also slowing. A combination of a large trade deficit, high oil prices, and a strong
economic expansion have increased the market's inflation expections, pushing up U.S. Treasury yields sharply. Consequently,
the FOMC wants to cultivate an image as a strong inflation fighter, in order to reassure the financial markets.
The rising price of oil may slow the FOMC's "rapid fire" rate hikes sometime this year. Oil price shocks, however, do not have
the dramatic impact on the business cycle that they once did. The Federal Reserve has found that a one-time energy shock
does not have a major impact on core inflation. As a recent Federal Reserve paper noted, oil prices rising relative to other
prices is not inflation. Inflation, by definition, is when all prices rise in general, due to monetary policy and the general
economy. Inflation prospects depend more on how the FOMC manages monetary policy relative to the economic expansion.
Higher interest rates and oil prices will slow economic growth in 2005, Gross Domestic Product (GDP) will probably be near
3.75% for the year. Long-term bond yields will continue to rise as Asian countries buy fewer Treasuries.
PalazS. liu sti C, C. A1. T.
Treasurer
PORTFOLIO STATISTICS
Dollars in Thousands
FEB-05
JAN-05
DEC-04
NOV-04
OCT-04
SEP-04
CITY
Month -End Book Value***
$
142,687
$
140,218
$
124,724
$
128,602
$
130,550
$
132,121
Month -End Market Value***
$
142,852
$
140,446
$
124,992
$
128,877
$
130,866
$
132,403
Paper Gain (Loss)
$
165
$
228
$
268
$
275
$
316
$
282
Prior Year Book Variance
$
17,749
$
12,381
$
(8,112)
$
(3,536)
$
(3,592)
$
(6,242)
Interest Earnings
$
283
$
243
$
222
$
214
$
200
$
191
Yield -To -Maturity
2.66%
2.54%
2.26%
2.08%
1.96%
1.84%
Weighted Maturity (Days)
172
178
121
119
124
123
Effective Duration
0.30
0.32
0.14
0.15
0.17
0.18
RDA
Month -End Book Value ***
$
159,105
$
160,560
$
147,802
$
148,730
$
149,149
$
158,671
Month -End Market Value ***
$
159,134
$
160,623
$
147,862
$
148,761
$
149,180
$
158,703
Paper Gain (Loss)
$
29
$
63
$
60
$
31
$
31
$
32
Prior Year Book Variance
$
(5,466)
$
(2,570)
$
6,079
$
4,546
$
4,929
$
5,778
Interest Earnings
$
285
$
268
$
239
$
221
$
216
$
202
Yield -To -Maturity
2.37%
2.23%
2.00%
1.84%
1.73%
1.61%
Weighted Maturity (Days)
136
127
65
65
65
62
Effective Duration
0.20
0.20
0.05
0.07
0.09
0.10
*** Omits SLGSs.
City of Palm Desert -- Portfolio Characteristics
28 February 2005
Dollars in Thousands
Aaeinq Interval Market Value
< 1 M $ 60,781 General Fund AgeingN
< 2M 3,033 ,
< 3M 8,041 100
< 6M 15,985 80 - 1
< 1 YR - e 61
< 2YR - _0 60 - -
< 3YR 12,001 °
40 -
< 4YR
a
< 5YR _ 20 8 16 12
> 5YR - 0 �, f-1 F 0 0 F"
Total: $ 99,841 ` < 1M < 2M < 3M < 6M < 1YR < 2YR < 3YR I
Ratinsas * Market Value I Credit Qualityl
AAA $ 31,187 2A2°
��]Unrated k` 72,785
AA 6,200 I BBB- ' Unrated
A 2,604 g% 53%
A-1 13,974 A-1
BBB- 12,150 10% A
Total: $ 138,900 A AA
4%
Sector Market Value (Asset Atlocation�
LAIF RDA Loan ,
Money Market Funds $ 19,098 28%D 24°fo
LAIF 40,000
RDA Loan 32,785 I Money Market MTNs
MTNs 20,773 Funds
Federal Agency 12,090 14% Federal Agency
Commercial D 9%
Commercial Paper 13,974 I Paper
Total: $ 138,720 10%
Month Citv Yield LAIF Yield Variance ,Performance
Mar04 1.56 1.47 0.09
Apr 1.54 1.45 0.09
May 1.53 1.43 0.11 2,6 -
Jun 1.58 1.47 0.11
Jul 1.68 1.60 0.07 2.2 -
Aug 1.74 1.67 0.06 2
Sep 1.84 1.77 0.07 I 1.8
Oct 1.96 1.89 0.07
Nov 2.08 2.00 0.08 I 1.4- d
Dec 2.26 2.20 0.06 Mar04 Apr May Jun Jul Aug Sep Oct Nov Dec Jan05 Feb
Jan05 2.54 2.26 0.28
Feb 2.66 2.37 0.29 I �ELai=Yield ®CitvYield
` Moody's Credit Ratings
** LAIF, and City Loan to RDA Page 2 of 8
City of Palm Desert
Portfolio Holdings
28 February 2005
Market Ratings
Par Value Issuer lCouponj Maturity Cost I YTM I Price I Value IMoody'sl S&P
Medium -Term Notes
$
2,406,000
ABBOTT LABS
6.80
5/15/05
$
2,428,989
2.08
100.70
$
2,422,755
Al
$
3,000,000
BANK ONE
4.13
9/1/07
$
3,034,306
3.64
100.54
$
3,016,308
Aa3
$
3,000,000
FORD MOTOR CREDIT
7.20
6/15/07
$
3,087,504
5.75
104.13
$
3,124,014
A3
$
2,500,000
FORD MOTOR CREDIT
7.20
6/15/07
$
2,572,920
5.75
104.13
$
2,603,345
A3
$
4,612,000
FORD MOTOR CREDIT
7.20
6/15/07
$
4,817,897
5.10
104.13
$
4,802,651
A3
$
1,610,000
FORD MOTOR CREDIT
6.75
5/15105
$
1,622,882
2.80
100.64
$
1,620,283
A3
$
3,000,000
GOLDMAN SACHS
7.20
3/1/07
$
3,212,109
3.50
106.12
$
3,183,573
Aa3
$
20,128,000
Subtotal
$
20,776,608
4.28
$
20,772,929
Commercial Paper -- Discount
$
3,000,000
GENERAL ELECTRIC
2.56
5113/05
$
2,976,107
2.62
99.44
$
2,983,227
P-1
$
3,000,000
GENERAL ELECTRIC
2.63
6115/05
$
2,968,221
2.70
99.90
$
2,997,110
P-1
$
3,000,000
GENERAL ELECTRIC
2.71
7/15/05
$
2,960,479
2.78
99.66
$
2,989,885
P-1
$
5,050,000
GENERAL ELECTRIC
2.73
6/22/05
$
4,999,067
2.80
99.08
$
5,003,784
P-1
$
14,050,000
Subtotal
$
13,903,873
2.73
$
13,974,006
Federal Agencies -- Discount
1$
1,015,000
FED. NATIONAL MTG ASSOC
1.92
5/2/05
$
997,021
2.00
99.55
$
1,010,433
Aaa
$
3,035,000
FED. NATIONAL MTG ASSOC
1.71
3/3/05
$
2,995,644
1.78
99.99
$
3,034,697
Aaa
$
3,045,000
FED. NATIONAL MTG ASSOC
1.79
4/1/05
$
2,999,427
1.86
99.78
$
3,038,301
Aaa
$
5,047,000
FED. NATIONAL MTG ASSOC
2.71
6/15/05
$
4,999,129
2.77
99.19
$
5,006,119
Aaa
J $
12,142,000
Subtotal
$
11,991,221
2.23
$
12,089,550
LGIP
$
40,000,000
L.A.I.F.
0.00
3/1/05
$
40,000,000
2.37
100.00
$
40,000,000
U
$
40,000,000
Subtotal
$
40,000,000
2.37
$
40,000,000
LGIP
$
9,419,473
C.A.M.P.
0.00
311/05
$
9,419,473
2.28
100.00
$
9,419,473
U
$
9,419,473
Subtotal
$
9,419,473
2.28
$
9,419,473
Pooled Funds -- AIM
$
9,678,194
PRIME PORTFOLIO
0.00
3/1105
$
9,678,194
2.13
100.00
$
9,678,194
Aaa
$
9,678,194
Subtotal
$
9,678,194
2.13
$
9,678,194
City Loan to RDA
$
32,785,480
CITY OF PALM DESERT
0.00
3/1/35
$
32,785,480
2.37
100.00
$
32,785,480
U
$
32,785,480
Subtotal
$
32,785,480
2.37
$
32,785,480
AA
A+
BBB -
BBB -
BBB -
BBB -
A+
AAA
AAA
AAA
AAA 1
1
U
AAA
I
AAA
I
U
"U" = Unrated
Page 3 of 8
City of Palm Desert
Portfolio Holdings
28 February 2005
Market Ratings
Par Value Issuer lCouponj Maturity Cost I YTM I Price I Value MoodysI S&P
Total Investments
$ 138,203,147
$
138,554,850
2.66
$
138,719,632
Cash
$ 3,182,632 CITY MAIN CHKG 0.00
3/1/05 $
3,182,632
0.00
100.00 $
3,182,632 N/A
$ 492,270 DESERT WILLOW CHKG 0.00
3/1/05 $
492,270
0.00
100.00 $
492,270 N/A
$ 457,617 RECREATIONAL FAC CHKG 0.00
3/1/05 $
457,617
0.00
100.00 $
457,617 N/A
$ 4,132,519 Subtotal
$
4,132,519
$
4,132,519
Total Investments and Cash
$ 142,335,666
$
142,687,368
$
142,852,151
Corporate Issuers
GENERAL ELECTRIC CAPITAL CORPORATION
FORD MOTOR CREDIT CORPORATION
GOLDMAN SACHS
BANK ONE
ABBOTTLABS
% of Portfolio
(Market Value)
10.07%
8.80%
2.30%
2.20%
1.80%
NIA
N/A
N/A
"U" = Unrated Page 4 of 8
Dollars in Thousands
Acieinct Interval
< 1 M
< 2M
< 3M
< 6M
< 1YR
< 2YR
< 3YR
< 4YR
< 5YR
> 5YR
Total:
uali '
AAA
Unrated **
AA
A
A-1
BBB -
Total:
Sector
LAIF
Money Market Funds
U.S. Treasury
Federal Agency
Commercial Paper
Corporate Bonds
Total:
Month
Mar04
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan05
Feb
RDA Yield
1.20
1.22
1.17
1.37
1.53
1.51
1.61
1.73
1.84
2.00
2.23
2.37
Palm Desert Redevelopment Agency -- Portfolio Characteristics
28 February 2005
Market Value
$ 74,281
2,953
3,618
3,088
8,998
$ 92,938
Market Value
$ 83,359
60,704
5,996
6,699
$ 156,758
Market Value
60,704
45,243
$ 23,093
15,023
5,996
6,699
$ 156,758
LAIF Yield
1.47
1.45
1.43
1.47
1.60
1.67
1.77
1.89
2.00
2.20
2.26
2.37
Portfolio Ageing w/o SLGSs�
100
90
80
80
70 -
c 60 -
c 50 -
40 - 11
CL 30
20 10
f 10- 0 0 3 4 3 n 0
0 ^ f
< 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR
(Credit Quality AA ,
0%
AAA A
53% 0%
A-1
4% Unrated **
BBB-
39%
I� 4%
(Asset Allocation Money Market
LAIF Funds
38% 29%
Commercial U.S. Treasury
Paper 15%
4% Corporate
cAll,
Bonds Federal Agency
4% 10%
Variance I Performance
-0.28
-0.23 I 2.5
-0.26
-0.10
2.0
-0.08 0
-0.16 m
-0.17 1.5
-0.16
-0.17 I 1.0
-0.20 Mar04 Apr May Jun Jul Aug Sep Oct Nov Dec Jan05 Feb
-0.03
0.00 ■ LAI F Yield ® RDA Yield
* Moody's Credit Ratings
** LAIF Page 5 of 8
Palm Desert Redevelopment Agency
Portfolio Holdings
28 February 2005
Par Value I
Issuer
i Coup
o
2/1/06 $ 3,616,951 3.94 102.36 $ 3,608,335
1/25/07 $ 3,088,370 4.85 103.02 $ 3,090,717
$ 6,705,320 4.36 $ 6,699,052
3/1/05 $ 2,999,569 1.80 99.99 $ 3,038,788
8/15/05 $ 2,952,448 2.87 98.57 $ 2,957,160
$ 5,952,017 2.33 $ 5,995,948
3/31/05 $ 23,102,551 1.86 99.94 $ 23,092,558
$ 23,102,551 1.86 $ 23,092,558
9/17/07
$
2,940,959
3.43
97.06
$
2,911,875
9/14/07
$
2,993,007
3.82
98.91
$
2,967,188
3/15/07
$
3,087,349
3.38
102.16
$
3,064,688
$
9,021,315
3.54
$
8,943,750
3/4/05
$
2,999,509
1.82
99.98
$
3,039,392
3/1/05
$
3,001,012
1.78
100.00
$
3,040,000
$
6,000,521
1.80
$
6,079,392
3/1/05 $ 40,000,000 2.37 100.00 $ 40,000,000
3/1/05 $
5,727,930
2.37
100.00 $
5,727,930
3/1/05 $
5,092,135
2.37
100.00 $
5,092,135
3/1/05 $
9,883,828
2.37
100.00 $
9,883,828
$
60,703,893
2.37
$
60,703,893
3/1/05 $ 17,501,192 2.28 100.00 $ 17,501,192
$ 17,501,192 2.28 $ 17,501,192
3/1/05 $ 27,741,755 2.13 100.00 $ 27,741,755
$ 27,741,755 2.13 $ 27,741,755
A3 BBB-
A3 BBB-
P-1 A-1+
P-1 A-1+
Aaa AAA
I
Aaa
AAA
Aaa
AAA
Aaa
AAA
Aaa AAA
Aaa AAA
U
U
U
U
U
U
U
U
U
AAA
Aaa
AAA
"U" = Unrated Page 6 of 8
Palm Desert Redevelopment Agency
Portfolio Holdings
28 February 2005
} Par Value I Issuer
Total Investments
$ 156,697,840
Cash
$ 2,062,199 HOUSING AUTH CHKG
$ 314,657 HOUSING AUTH TRUST
$ 2,376,856 Subtotal
Total Investments and Cash
$ 159,074,696
Market
Ratings
Coupon I Maturity
Cost
YTM
I Price
Value
Moody's S&P
$
156,728,565
2.37
$
156,757,540
0.00 3/1/05 $
2,062,199
0.00
100.00 $
2,062,199
N/A N/A
0.00 3/1/05 $
314,657
0.00
100.00 $
314,657
N/A N/A
$
2,376,856
$
2,376,856
Corporate Issuers
FORD MOTOR CREDIT CORPORATION
GENERAL ELECTRIC CAPITAL CORPORATION
$ 159,105,421 $ 159,134,396
% of Portfolio
(Market Value)
4.28%
3.80%
"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 Treasurers "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 28 February 2005, 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 March 2005,
Pas C.C.S r
City Treasurer
SUMMARY OF AUTHORIZED INVESTMENTS
I 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
0.0% 14.7%
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%
8.7% 9.6%
53601(f)
Bankers's Acceptances
180 Days
40%
180 Days
40% A-1 & P-1
- -
53601(g)
Commercial_Paper
270 Days
25%
A-1+ or P-1
270 Days
25% A-1+ or P-1
10.0% 3.8%
53601(h)
Negotiable CDs
5 Years
3^
5 Years
30% AA- or A63
- -
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
30 /o
A
5 Years
0
30 /o
A
0
15.0 /0
0
4.3 /o
53601(k)
Mutual Funds - _ .
90 Days
20%
AAA & Aaa
90 Days
20% (2)
AAA & Aaa
7.0%
I 17.7%
53601(I)
Trust Indenture Debt
NotAuthorized
53601(m)
Secured Bank Deposits
5 Years
No Limit
Not Authorized
53601(k)
Local Government
AAA & Aaa
AAA & AaaI
Investment Pools_
90 Days
20%
or Advisor
90 Day s I
20% 2)
(
I or Advisor 1
6.8%
I 11.2%
53601(n)
Mortgage -Backed
5 Years
20%
A (Issuer) &
Not Authorized
Securities
AA (Security)
LAW .Z,__ .
No Limit
No Limit
28.9%
I 38.7%
not a bondhas
(1) The City loan to RDA, which is , been approved by the Palm Desert
City Council. I
76.3%
+ 100.0%
(2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds
* Certified California Municipal Treasurer
Page 8 of 8