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Home My WebLink AboutInvestment Reports - June 2005X� CITY OF PALM DESERT FINANCE DEPARTMENT INTEROFFICE MEMORANDUM TO: RACHELLE KLASSEN, CITY CLERK FROM: NIAMH ORTEGA, RECORDING SECRETAW��N 1� DATE: AUGUST 3, 2005 SUBJECT: COMPLIANCE ANALYSIS AND INVESTMENT REPORTS Please find attached the Compliance Analysis and Investment Reports for June 2005 which were presented and approved at the meeting of July 24, 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 .\Financeftamh 0negatWpd0cs\1nvestmenl Committee%Memos\rklasseninvreport012605.wpd C an e_deve opme AgbirtiCjFPortiro_los i4WAL1 A(VCi INV�T11I� .{�a'_:•-..~'•,FS^.,;n,z_.."'a:;'^"'w%Y3'ss•�v.`:t+,.�i�r""'°-•,�s�s.�i.'\:'.`."�:�._ ._;. �:;�� ', ..:la •_ Junk 2005R .....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) met on June 30, and raised the Federal Funds Rate by 25 basis points to 3.25 percent. This was the ninth increase in 12 months. The FOMC continued to raise short-term rates due to concern over inflationary pressures in the red-hot housing markets. "Kiplinger's Washington Newsletter" is forecasting that the FOMC will stop making rate increases in the spring of 2006, after the Federal Funds Rate has reached 4.25 percent. Although oil prices are rising to $60 per barrel, the impact on inflation has been negligible due to strong competitive pressures, labor slack, and an absence of wage pressure. The Core Consumer Price Index (CPI) has recorded a 0.1 percent or less monthly change in each of the past three months. Economic growth, as measured by Gross Domestic Product (GDP) is projected to be in the 3.00-3.50 percent range for 2005. Although the Unemployment Rate has fallen to five percent, labor market conditions are considerably weaker, since the decline in unemployment has been accompanied by a slide in labor force participation (people who are no longer are looking for work). Conditions in the bond markets continue to be unusual. In many cases, comparatively rated Agencies now have higher yields than corporates, despite the fact that corporates carry higher default risk. Long-term interest rates remain remarkably low, causing the yield cure to flatten even more. The Chinese have been heavy buyers of U.S. Treasuries with longer maturities. Dollars in Thousands CITY Month -End Book Value — Month -End Market Value"' Paper Gain (Loss) Prior Year Book Variance Interest Earnings Yield -To -Maturity Weighted Maturity (Days) Effective Duration RDA Month -End Book Value Month -End Market Value Paper Gain (Loss) Prior Year Book Variance Interest Earnings Yield -To -Maturity Weighted Maturity (Days) Effective Duration ,acu bS. 67LOsom C. C. A1. T. Treasurer PORTFOLIO STATISTICS JUNE-05 MAY-05 APR-05 MAR-05 FEB-05 JAN-05 $ 150,073 $ 172,413 $ 145,753 $ 146,856 $ 142,687 $ 140,218 $ 149,868 $ 172,196 $ 145,498 $ 146,787 $ 142,852 $ 140,446 $ (205) $ (217) $ (255) $ (69) $ 165 $ 228 $ 7,656 $ 46,510 $ 15,413 $ 20,165 $ 17,749 $ 12,381 $ 377 $ 359 $ 321 $ 325 $ 283 $ 243 3.29% 3.06% 2.94% 2.79% 2.66% 2.54% 220 134 166 170 172 178 0.43 0.21 0.25 0.28 0.30 0.32 $ 146,433 $ 124,373 $ 125,433 $ 158,324 $ 159,105 $ 160,560 $ 146,296 $ 124,233 $ 125,251 $ 158,129 $ 159,134 $ 160,623 $ (137) $ (140) $ (182) $ (195) $ 29 $ 63 $ (38,476) $ (52,270) $ (27,263) $ (5,191) $ (5,466) $ (2,570) $ 366 $ 302 $ 286 $ 375 $ 285 $ 268 3.09% 2.93% 2.80% 2.58% 2.37% 2.23% 140 101 101 80 136 127 0.30 0.21 0.22 0.18 0.20 0.20 "' Omits SLGSs. Dollars in Thousands Aaefna Interval < 1M < 2M < 3M < 6M < 1YR < 2YR < 3Y R < 4YR < 5YR > 5YR Total: Ratings AAA Unrated " AA A-1 BB+ Total: Sector MMFs LAIF RDA Loan MTNs Agencies CP Total: Month Jul04 Aug Sep Oct Nov Dec Jan05 Feb Mar Apr May Jul City of Palm Desert -- Portfolio Characteristics 30 June 2005 Market Value $ 56,026 2,982 4,952 6,562 3,002 16,538 8,974 $ 99,036 Market Value $ 53,414 72,786 6,150 3,987 10,228 $ 146,565 Market Value $ 16,602 40,000 32,785 18,354 34,837 3,987 $ 146,565 Citv Yield LAIF Yield 1.68 1.60 1.74 1.67 1.84 1.77 1.96 1.89 2.08 2.00 2.26 2.20 2.54 2.26 2.66 2.37 2.79 2.54 2.94 2.72 3.06 2.86 3.29 2.97 r � general Fund Ageing 100 80 57 0 60 - 0 t 40 0 a 17 20 3 5 7 3 n n ,.-� I-1 1-, I I 0 < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR f Credit Quality AAA 36% BB+ nra e 7% 50% A-1.p 3% - AA 4% (Asset Allocationy RDA Loan 22% LAW 27% xv MTNs h 13% MMFs 11% CIDAgencies 3% 24% Variance Performance 0.07 0.06 3.4 0.07 0.07 2.9 0.08 0.06 m 2.4 0.28 } 1.9 0.29 0.25 1.4 0.21 Ju104 Aug Sep Oct Nov DecJan05 Feb Mar Apr May Jul 0.21 0.32 *-AIF Yie d ■Cityty Yield Standard and Poors '" LAIF, and City Loan to RDA Page 2 of 8 City of Palm Desert Portfolio Holdings 30 June 2005 Market Ratings Par Value I Issuer lCouponj Maturity I Cost I YTM I Price I Value Moody'si S&P Medium -Term Notes $ 3,000,000 BANK ONE 4.13 1-Sep-07 $ 3,029,732 3.64 100.41 $ 3,012,240 Aa3 A+ $ 3,000,000 FORD MOTOR CREDIT CORP 7.20 15-Jun-07 $ 3,074,761 5.75 101.15 $ 3,034,467 Baa2 BB+ $ 2,500,000 FORD MOTOR CREDIT CORP 7.20 15-Jun-07 $ 2,562,301 5.75 101.15 $ 2,528,722 Baa2 BB+ $ 4,612,000 FORD MOTOR CREDIT CORP 7.20 15-Jun-07 $ 4,787,912 5.10 101.15 $ 4,664,987 Baa2 BB+ $ 2,000,000 GENERAL ELECTRIC 0.00 9-Nov-06 $ 1,979,142 3.92 98.77 $ 1,975,454 Aaa AAA $ 3,000,000 GOLDMAN SACHS 7.20 1-Mar-07 $ 3,176,758 3.50 104.60 $ 3,137,871 Aa3 A+ $ 18,112,000 Subtotal $ 18,610,605 4.66 $ 18,353,742 Commercial Paper - Discount $ 3,000,000 GENERAL ELECTRIC 0.00 15-Jul-05 $ 2,960,479 2.75 99.86 $ 2,995,888 Aaa AAA $ 1,000,000 GENERAL ELECTRIC 0.00 7-Oct-05 $ 987,206 3.33 99.06 $ 990,623 Aaa AAA $ 4,000,000 Subtotal $ 3,947,685 2.93 $ 3,986,510 Federal Agencies - Discount $ 2,060,000 FED HOME LOAN BANK 0.00 20-Mar-06 $ 2,000,681 3.55 97.39 $ 2,006,234 Aaa AAA $ 2,020,000 FED HOME LOAN BANK 0.00 14-Oct-05 $ 1,999,019 3.31 99.01 $ 2,000,002 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 0.00 15-Sep-05 $ 1,978,786 3.16 99.29 $ 1,985,800 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 0.00 13-Dec-05 $ 1,967,042 3.45 98.40 $ 1,968,000 Aaa AAA $ 3,000,000 FED NATIONAL MTG ASSOC 0.00 19-Sep-05 $ 2,967,135 3.16 99.25 $ 2,977,500 Aaa AAA $ 3,000,000 FED NATIONAL MTG ASSOC 0.00 10-Aug-05 $ 2,977,045 3.12 99.64 $ 2,989,200 Aaa AAA $ 1,023,000 FED NATIONAL MTG ASSOC 0.00 18-Jan-06 $ 999,798 3.49 98.03 $ 1,002,847 Aaa AAA $ 1,630,000 FED NATIONAL MTG ASSOC 0.00 15-Nov-05 $ 1,607,855 3.40 98.70 $ 1,608,810 Aaa AAA $ 16,733,000 Subtotal $ 16,497,361 3.34 $ 16,538,392 Federal Agencies - Coupon $ 3,000,000 FED HOME LOAN BANK 3.70 15-Aug-07 $ 2,994,393 3.79 99.72 $ 2,991,563 Aaa AAA $ 1,500,000 FED HOME LOAN BANK 2.10 13-Oct-06 $ 1,468,507 3.79 97.94 $ 1,469,063 Aaa AAA $ 2,035,000 FED HOME LOAN MTG CORP 2.50 4-Dec-06 $ 1,997,522 3.84 98.19 $ 1,998,116 Aaa AAA $ 2,009,000 FED HOME LOAN MTG CORP 1.88 15-Feb-06 $ 1,987,006 3.67 98.84 $ 1,985,771 Aaa AAA $ 2,786,000 FED NATIONAL MTG ASSOC 7.13 15-Mar-07 $ 2,948,946 3.55 105.44 $ 2,937,489 Aaa AAA $ 3,000,000 FED NATIONAL MTG ASSOC 3.00 15-Aug-07 $ 2,962,600 3.63 98.31 $ 2,949,375 Aaa AAA $ 3,000,000 FED NATIONAL MTG ASSOC 2.75 11-Aug-06 $ 2,965,522 3.81 98.88 $ 2,966,250 Aaa AAA $ 1,000,000 FED NATIONAL MTG ASSOC 7.00 15-Jul-05 $ 1,001,445 3.20 100.13 $ 1,001,250 Aaa AAA $ 18,330,000 Subtotal $ 18,330,000 3.69 $ 18,298,875 Local Government Investment Pool $ 40,000,000 L.A.I.F. 0.00 1-Jul-05 $ 40,000,000 2.97 100.00 $ 40,000,000 U U $ 40,000,000 Subtotal $ 40,000,000 2.97 $ 40,000,000 "U" = Unrated Page 3 of 8 City of Palm Desert Portfolio Holdings 30 June 2005 Market Ratings Par Value Issuer jCouponj Maturity I Cost I YTM Price I Value IMoody'sl S&P Local Government Investment Pool $ 7,497,359 C.A.M.P. 0.00 1-Jul-05 $ 7,497,359 2.78 100.00 $ 7,497,359 U AAA $ 7,497,359 Subtotal $ 7,497,359 2.78 $ 7,497,359 Money Market Fund $ 9,104,283 AIM PRIME PORTFOLIO 0.00 1-JUI-05 $ 9,104,283 2.73 100.00 $ 9,104,283 Aaa AAA $ 9,104,283 Subtotal $ 9,104,283 2.73 $ 9,104,283 City Loan to RDA $ 32,785,480 CITY OF PALM DESERT 0.00 1-Jul-05 $ 32,785,480 2.97 100.00 $ 32,785,480 U U $ 32,785,480 Subtotal $ 32,785,480 2.97 $ 32,785,480 Total Investments $ 146,562,122 $ 146,772,773 3.29 $ 146,564,642 Cash $ 1,755,170 CITY MAIN CHKG 0.00 1-Jul-05 $ 1,755,170 0.00 100.00 $ 1,755,170 N/A N/A $ 1,258,763 DESERT WILLOW CHKG 0.00 1-Jul-05 $ 1,258,763 0.00 100.00 $ 1,258,763 N/A N/A $ 289,450 RECREATIONAL FAC CHKG 0.00 1-Jul-05 $ 289,450 0.00 100.00 $ 289,450 N/A N/A $ 3,303,384 Subtotal $ 3,303,384 $ 3,303,384 Total Cash and Investments $ 149,865,506 $ 150,076,156 $ 149,868,025 Corporate Issuers FORD MOTOR CREDIT CORPORATION GENERAL ELECTRIC CAPITAL CORPORATION GOLDMAN SACHS BANK ONE % of Portfolio (Market Value) 6.82% 3.98% 2.09% 2.01 % "U" = Unrated Page 4 of 8 Palm Desert Redevelopment Agency -- Portfolio Characteristics 30 June 2005 Dollars in Thousands Ageing Interval Market Value < 1 M $ 62,151 < 2M 2,979 < 3M 5,999 < 6M - < 1YR 12,457 < 2YR 14,989 < 3YR 5,896 < 4YR - < 5YR > 5YR - Total: $ 104,471 Quality Market Value AAA $ 68,214 Unrated " 60,483 A-1 8,999 BB+ 6,582 Total: $ 144,278 r_ .. I Portfolio Ageing w/o SLGSS 100 90 80 0 70 59 c 60 . 0 50 r- 40 nO 30 4 114 20 6 12 6 10 r1 0 n 0 I I .3 r-i < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR i_ - Credit Oualityl - ---------- 1 AAA 47% Unrated 42% BB+ r:, 5% A-1 � 0 o i Sector Market Value l----- - - Asset Allocatiol LAIF $ 60,483 LAIF MMFs 41,491 MMFs 42% 29% Agencies 20,834 CP 8,999 MTNs 12,471 Treasuries - MTNs CP Agencies Total: $ 144,278 9% 6% 14% Month RDA Yield LAIF Yield Ju104 1.53 1.60 Aug 1.51 1.67 Sep 1.61 1.77 Oct 1.73 1.89 Nov 1.84 2.00 Dec 2.00 2.20 Jan05 2.23 2.26 Feb 2.37 2.37 Mar 2.58 2.54 Apr 2.80 2.72 May 2.93 2.86 Jun 3.09 2.97 Variance Performancl -0.08 -0.1 6 3.2 -0.17 -0.16 -0.17 0 2.6 -0.20 ° i d -0.03 > 2.0 0.00 0.04 1.4 0.08 Ju104 Aug Sep Oct Nov Dec Jan05 Feb Mar Apr May Jun 0.07 0.13 INLAIF Yield ■RDA Yield ' Standard and Poors "' LAIF Page 5 of 8 I Par Value Palm Desert Redevelopment Agency Portfolio Holdings 30 June 2005 Market Ratings Issuer lCouponj Maturity I Cost I YTM I Price I Value IMoody'si S&P Medium -Term Notes $ 3,000,000 FORD MOTOR CREDIT CORP 6.50 $ 3,525,000 FORD MOTOR CREDIT CORP 6.88 $ 2,896,000 GENERAL ELECTRIC 6.38 $ 2,896,000 GENERAL ELECTRIC 6.38 $ 12,317,000 Subtotal Commercial Paper - Discount $ 3,000,000 GENERAL ELECTRIC 0.00 $ 3,028,000 GENERAL ELECTRIC 0.00 $ 3,028,000 GENERAL ELECTRIC 0.00 $ 9,056,000 Subtotal Federal Agency -- Coupon $ 3,000,000 FED FARM CREDIT BANK 2.63 $ 3,000,000 FED HOME LOAN BANK 3.38 $ 3,005,000 FED HOME LOAN BANK 2.50 $ 3,000,000 FED HOME LOAN MTG CORP 4.88 $ 2,974,000 FED HOME LOAN MTG CORP 3.63 $ 2,974,000 FED HOME LOAN MTG CORP 3.63 $ 2,973,000 FED NATIONAL MTG ASSOC 3.63 1 $ 20,926,000 Subtotal Local Government Investment Pool $ 40,000,000 L.A.I.F. 0.00 $ 5,761,496 L.A.I.F. (HOUSING) 0.00 $ 14,561,637 L.A.I.F. BOND PROCEEDS 0.00 $ 160,090 L.A.I.F. BOND PROCEEDS 0.00 1 $ 60,483,223 Subtotal Local Government Investment Pool $ 17,255,483 C.A.M.P. $ 17,255,483 Subtotal Money Market Fund $ 24,235,330 AIM $ 24,235,330 Subtotal Total Investments $ 144,273,036 "U" = Unrated 25-Jan-07 $ 3,072,866 4.85 100.72 $ 3,021,534 Baa2 BB+ 1-Feb-06 $ 3,583,514 3.94 101.00 $ 3,560,232 Baa2 BB+ 15-Mar-06 $ 2,952,843 3.52 101.69 $ 2,944,855 Aaa AAA 15-Mar-06 $ 2,952,843 3.52 101.69 $ 2,944,855 Aaa AAA $ 12,562,066 3.97 $ 12,471,477 15-Aug-05 $ 2,952,448 2.87 99.57 $ 2,987,197 P-1 A-1+ 15-Sep-05 $ 2,999,470 3.28 99.27 $ 3,005,915 P-1 A-1+ 15-Sep-05 $ 2,999,470 3.28 99.27 $ 3,005,915 P-1 A-1+ $ 8,951,387 3.14 $ 8,999,027 17-Sep-07 $ 2,948,694 3.43 97.50 $ 2,925,000 Aaa AAA 14-Sep-07 $ 2,993,926 3.82 99.09 $ 2,972,813 Aaa AAA 15-Mar-06 $ 2,985,851 3.42 99.16 $ 2,979,645 Aaa AAA 15-Mar-07 $ 3,073,069 3.38 101.81 $ 3,054,375 Aaa AAA 15-Sep-06 $ 2,975,059 3.60 99.81 $ 2,968,424 Aaa AAA 15-Sep-06 $ 2,975,254 3.60 99.81 $ 2,968,424 Aaa AAA 15-Mar-07 $ 2,976,549 3.95 99.75 $ 2,965,568 Aaa AAA $ 20,928,402 3.60 $ 20,834,248 1-Jul-05 $ 40,000,000 2.97 100.00 $ 40,000,000 U U 1-Jul-05 $ 5,761,496 2.97 100.00 $ 5,761,496 U U 1-Jul-05 $ 14,561,637 2.97 100.00 $ 14,561,637 U U 1-Jul-05 $ 160,090 2.97 100.00 $ 160,090 U U $ 60,483,223 2.97 $ 60,483,223 0.00 1-Ju1-05 $ 17,255,483 2.78 100.00 $ 17,255,483 $ 17,255,483 2.78 $ 17,255,483 0.00 1-Jul-05 $ 24,235,330 0.00 100.00 $ 24,235,330 $ 24,235,330 2.73 $ 24,235,330 $ 144,415,892 3.09 $ 144,278,788 U AAA i Aaa AAA Page 6 of 8 Palm Desert Redevelopment Agency Portfolio Holdings 30 June 2005 Par Value Issuer Cash $ 1,696,066 HOUSING AUTH CHKG $ 320,917 HOUSING AUTH TRUST $ 2,016,983 Subtotal Total Cash and Investments $ 146,290,019 Market Ratings l Couponj Maturity I Cost I YTM I Price I Value Moody'si S&P 0.00 1-Jul-05 $ 1,696,066 0.00 100.00 $ 1,696,066 N/A N/A 0.00 1-Jul-05 $ 320,917 0.00 100.00 $ 320,917 N/A N/A $ 2,016,983 $ 2,016,983 Corporate Issuers GENERAL ELECTRIC CAPITAL CORPORATION FORD MOTOR CREDIT CORPORATION $ 146,432,874 % of Portfolio (Market Value) 10.18% 4.50% $ 146,295,771 "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 Treasurer's '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 30 June 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 27 July 2005, ,na is, rjd4oyt, C. C. xi'. T. City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS 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) 5360f(b)- -_-U.9. Trea§urie-s '' 5 Years No Limit 6Yeafs No Limit = `0.0% 0.0% 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 A�j6666$ _ 5 Years- No Limit 5 Years 30% 90/0 23.7% 14.5% 53601(f)' BankereT .'Acceptarib es 180 Days 40% . ",-' 180 Days 40% A-1 & P-1 53601(g) Corti rcial_paper-", 270 Days 25% A-1+ or P-f70 2Day§ 26% A-1+ or P'-1 2,7% 6.2°l0 53601(h) Negotiable CDs _yla- 5 Years 30%,` - -- 5 Years 30% AA- or Aa3 = 63601(i) " .Repos ":' � _ : 1 Year No Limit = 30 Days 2b°/,= AAA &Aaa - .__ - 53601(i) Reverse Repos 92 Days 20%' Not Authorized 5360(6 Medium -Term Notes 5-Years 30% A 5 Years 361.1 — A., 12.r/0 87%- 53601(k) Mutua`Funds 90. Days 20% . AAA & Aaa 90 Days 20% (2) f AAA & Aaa, 6.2% I 16.8% 53601(I) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) Loci( Gove`rnrrierit". :' -` AAA &_A2a - AAA & Aa investmerif Poo(s 90 Da s 20 % or Advisor 90 Days 20 % 2 I O I or Advisor 5.1 /0 I 12.0 r 53601(n) Mortgage -Backed 5 Years 20% A (Issuer) & Not Authorized Securities AA (Security; No Liniif .4. K No Ginit ' V.3% 41.9% (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. 77.7% 100.0% (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. Certified California Municipal Treasurer Page 8 of 8