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Home My WebLink AboutCity and RDA - Investment Report - August 2005♦ City of Palm Desert City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT August 2005 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 August 9, and raised the Federal Funds Rate 25 basis points to 3.50 percent. The Committee commented that while the economy continued to be on solid footing, inflationary pressures remained elevated. It is believed that the FOMC will continue to raise short-term interest rates well into next year until the over -heated real estate market slows down. At least 23 percent of current real estate investors are speculators. The FOMC wants to avoid a replay of the "irrational exurbance" that preceded the 2001 stock market crash. The money fueling the real estate boom came from the stock market, with many former stock investors intent upon recouping their losses, and then some. The chief story in August, however, was the energy sector. Crude oil prices reached $70 a barrel, continuing a three-year upward price trend. Hurricane Katrina did extensive damage to oil and gas production in the South, affecting 25 percent of U.S. oil and gas production. This led to a spike in gasoline prices, and product shortages. The U.S. Government responded by drawing upon the Strategic Petroleum Reserve in order to smooth out prices and maintain supply. Job growth, personal income, and personal spending continued to grow at a strong pace in August. Consumer confidence, however, showed a sharp decline. Gross Domestic Product (GDP) was revised down from 3.4 percent to 3.3 percent after it -vas learned that consumers had not spent as much as the Government had originally thought. 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 6iibji-,�2, L:C.7- Treasurer PORTFOLIO STATISTICS AUG-0: JULY-05 JUNE-05 MAY-05 APR-05 MAR-05 S 153,545 $ 151,176 S 150,073 $ 172,413 $ 145,753 $ 146,856 $ 153,380 S 150,936 $ 149,868 S 172,196 $ 145,498 $ 146,787 $ (165) S (240) $ (205) $ (217) $ (255) S (69) $ 6 570 $ 9,725 $ 7,656 $ 46,510 $ 15,413 $ 20,165 $ 444 $ 437 $ 377 $ 359 $ 321 $ 325 3.43% 3.34% 3.29% 3.06% 2.940% 2.79% 208 216 220 134 166 170 0.30 0.40 0.43 0.21 0.25 0.28 S 139,481 $ 143,968 $ 146,433 $ 124.373 $ 125,433 $ 158,324 $ 13929; $ 143,916 $ 146,296 $ 124,233 $ 125,251 $ 158,129 S (190) S (52) $ (137) $ (140) S (182) S (195) $ (21,638; $ (31,342) $ (38,476) $ (52,270) $ (27,263) $ (5,191) $ 374 S 386 $ 366 $ 302 $ 286 $ 375 3.32°o 3.15% 3.09% 2.93070 2.80% 2.58% 146 142 140 101 101 80 0.27 0.28 0.30 0.21 0.22 0.18 "' Omits SLGSs. Dollars in Thousands Aqeinq Interval <1M < 2M < 3M < 6M < 1YR < 2YR < 3YR < 4YR < 5YR > 5YR Total: Ratinqs AAA Unrated " AA A-1 BB+ Total: Sector MMFs LAIF RDA Loan MTNs Agencies CID Total: City of Palm Desert -- Portfolio Characteristics 31 August 2005 Market Value $ 65,897 2 999 1.13 2.978 4.959 i 9.504 2,939 S 100,949 Market Value S 93.8 70 40.000 6,'31 996 10,258 S 151,255 Market Value S 28.229 40.000 32.785 18,36 i 30,884 996 S 151,255 Month Citv Yield LAIF Yield Variance Sep04 1.84 1.77 0.07 Oct 1.96 1.89 0.07 Nov 2.08 2.00 0.08 Dec 2.26 2.20 0.06 Jan05 2.54 2.26 0.28 Feb 2.66 2.37 0.29 Mar 2.79 2.54 0.25 Apr 2.94 2.72 0.21 May 3.06 2.86 0.21 Jun 3.29 2.97 0.32 Jul 3.37 3.08 0.29 =.ur 3.d3 3.18 0.25 General Fund AgeingM 100 ----- ----- -- - ----- - -- -- - -- -- --- - -- - - 80 � 65 c 60 0 r 40 a° 19 20 3 2 3 5 I I 3 < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR (Credit Quality BB+ AAA 7% 62% A-1 1 °' 0 AA 49"0 Unrated " 26% Asset Allocation LAIF RDA Loan 264.0 22% 19%MMFs MTNs °•0 CP Agencies 1% 20% Performance 3.5 3.0 v 2.5 - 2.0 1.5---------------- -�- Sep04 Oct Nov Dec Jan05 Feb Mar Apr May Jun Jul Aug ' Standard and Poors LAIF, and City Loan to RDA Page 2 of 8 City of Palm Desert Portfolio Holdings 31 August 2005 Market Par Value Issuer l Couponj Maturity I Cost I YTM I Price Value Medium -Term Notes Ratings Moody's S & P $ 3,000,000 BANK ONE 4.13 1-Sep-07 $ 3,027,445 3.64 100.03 $ 3,000,828 Aa3 A+ S 3.000,000 FORD MOTOR CREDIT CORP 7.20 15-Jun-07 $ 3,068,389 5.75 101.45 $ 3,043,401 Baa3 BB+ $ 2,500,000 FORD MOTOR CREDIT CORP 7.20 15-Jun-07 $ 2,556,991 5.75 101.45 S 2,536:168 Baa3 BB+ S 4,612,000 FORD MOTOR CREDIT CORP 7.20 15-Jun-07 $ 4,772,919 5.10 101.45 $ 4,678,722 Baa3 BB+ $ 2,000,000 GENERAL ELECTRIC 3.13 9-Nov-06 $ 1,981,706 3.92 98.59 $ 1,971,834 Aaa AAA $ 3,000.000 GOLDMAN SACHS 7.20 1-Mar-07 $ 3,159,082 3.50 104.33 $ 3,129.915 Aa3 A+ S 18,112,000 Subtotal $ 18,566,533 4.66 S 18,360,868 Commercial Paper -- Discount S 1.000,000 GENERAL ELECTRIC 3.29 7-Oct-05 $ 987,206 3.38 99.60 $ 996,043 P-1 A-1+ $ 1,000,000 Subtotal $ 987,206 3.38 S 996,043 Federal Agencies -- Discount $ 2,060:000 FED HOME LOAN BANK 0.00 $ 2,020,000 FED HOME LOAN BANK 0.00 $ 2,000,000 FED HOME LOAN MTG CORP 0.00 $ 2,000,000 FED HOME LOAN MTG CORP 0.00 $ 3,000,000 FED NATIONAL MTG ASSOC 0.00 S 1,023,000 FED NATIONAL MTG ASSOC 0.00 $ 1,630,000 FED NATIONAL MTG ASSOC 0.00 1 $ 13,733,000 Subtotal Federal Agencies -- Coupon $ 3,000,000 FED HOME LOAN BANK 3.70 $ 1,500,000 FED HOME LOAN BANK 2.10 $ 2,035,000 FED HOME LOAN MTG CORP 2.50 $ 2,009,000 FED HOME LOAN MTG CORP 1.88 $ 2,786,000 FED NATIONAL MTG ASSOC 7.13 S 3,000,000 FED NATIONAL MTG ASSOC 3.00 $ 3,000,000 FED NATIONAL MTG ASSOC 2.75 1 $ 17,330,000 Subtotal LGIP $ 40,000,000 L.A.I.F. S 40,000,000 Subtotal Local Government Investment Pool $ 18,163,220 C.A.M.P. IS 18,163,220 Subtotal "U" = Unrated 20-Mar-06 $ 2,000,681 3.59 97.86 $ 2,015,916 14-Oct-05 $ 1,999.019 3.36 99.58 $ 2,011,516 15-Sep-05 $ 1,978,786 3.21 99.86 $ 1,997,200 13-Dec-05 $ 1,967,042 3.49 98.95 $ 1,979,000 19-Sep-05 $ 2,967,135 3.21 99.83 $ 2,994,900 18-Jan-06 S 999,798 3.54 98.55 $ 1,008,167 15-Nov-05 $ 1.607,855 3.44 99.25 S 1,617,775 $ 13,520,315 3.38 $ 13,624,474 15-Aug-07 $ 2,994,833 3.79 99.34 $ 2,980,313 13-Oct-06 $ 1,472,597 3.79 97.97 $ 1,469,531 4-Dec-06 $ 2,001,905 3.84 98.19 $ 1,998,116 15-Feb-06 $ 1,992,897 3.67 99.06 $ 1,990,166 15-Mar-07 S 2,933,023 3.55 104.63 $ 2,914,853 15-Aug-07 $ 2,965,537 3.63 98.06 S 2,941,875 11-Aug-06 $ 2,970,694 3.81 98.81 $ 2,964,375 $ 17,331,486 3.72 $ 17,259,228 0.00 1-Sep-05 $ 40,000,000 3.12 100.00 $ 40,000,000 $ 40,000,000 3.12 S 40,000,000 0.00 1-Sep-05 S 18,163,220 3.27 100.00 $ 18.163,220 $ 18,163,220 3.27 $ 18,163,220 Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa Aaa AAA AAA AAA AAA AAA AAA AAA 1 1 AAA AAA AAA AAA AAA AAA AAA U U U AAA Page 3 of 8 City of Palm Desert Portfolio Holdings 31 August 2005 Market Ratings Par Value Issuer lCouponj Maturity I Cost I YTM Price Value Moody's S & P Money Market Fund $ 10,065,342 AIM 0.00 1-Sep-05 $ 10,065,342 3.12 100.00 $ 10,065,342 Aaa AAA $ 10,065,342 Subtotal $ 10,065,342 3.12 $ 10,065,342 City Loan to RDA $ 32,785,480 CITY OF PALM DESERT 0.00 1-Sep-05 S 32,785,480 3.18 100.00 $ 32,785,480 U U S 32,785,480 Subtotal $ 32,785,480 3.18 $ 32,785,480 Total Investments $ 151,189,042 $ 151,419,582 3.43 $ 151,254,654 Cash S 1,180,030 CITY MAIN CHECKING 0.00 1-Sep-05 $ 1,180,030 0.00 100.00 S 1,180,030 N/A N/A $ 591,543 DESERT WILLOW CHKG 0.00 1-Sep-05 $ 591,543 0.00 100.00 $ 591,543 N/A N/A S 354,061 RECREATIONAL FAC CHKG 0.00 1-Sep-05 $ 354,061 0.00 100.00 S 354,061 N/A N/A $ 2,125,634 Subtotal $ 2,125,634 $ 2,125,634 Total Cash and Investments $ 153,314,676 $ 153,545,215 $ 153,380,288 Corporate Issuers FORD MOTOR CREDIT CORPORATION GENERAL ELECTRIC CAPITAL CORPORATION GOLDMAN SACHS BANK ONE % of Portfolio (Market Value) 6.67% 1.93% 2.04% 1.95% "U" = Unrated Page 4 of 8 Palm Desert Redevelopment Agency -- Portfolio Characteristics 31 August 2005 Dollars in Thousands Ageing Interval Market Value (Portfolio < 1 M S 64,205 Ageing w/o SLGSsI 1 < 2M - < 3M - 100 -- - ----- -- - -- - - -- - ----- < 6M 3,560 90 80 < 1YR 8,850 66 0 70 < 2YR 14,929 c 60 < 3YR F.;55 ° 500 r < 4YR a° 30 15 < 5YR 20 1p 0 0 4 6 0 > 5YR r-, n I I r-1 Total: $ 97,399 < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR Quality " Market Value Credit Quality AAA 5 64, , 86 Unrated " 60 790 A Unrated " 47 A-1 6029 44'-0 BB+ 8.575 BB+ Total: $ 137,580 5% A-1 4% Sector Market Value Asset Allocation LAIF $ 60,789 MMFs 37,540 LAIF MMFs Agencies 20.788 4500 27% CP 9 MTNs 12.43 Treasuries - MTNs CP Agencies Total: $ 137,580 9% 40;o 15% lPerformancel Month RDA Yield LAW Yield Variance 1 Sep04 1.61 1.77 -0.17 Oct 1.73 1.89 -0.16 3.5 Nov 1.84 2.00 -0.17 - Dec 2.00 2.20 -0.20 3.0 -7 Jan05 2.23 2.26 -0.03 - Feb 2.37 2.37 0.00 v_ 2.5 d Mar 2.58 2.54 0.04 r 2.0 :. 4' ' Apr 2.80 2.72 0.08 Fh I r i May 2.93 2.86 0.07 1.5 Fi' - ----; f---r- ---J Jun 3.09 2.97 0.13 Sep04 Oct Nov Dec Jan05 Feb Mar Apr May Jun Jul Aug Jul 3.21 3.08 0.13 , c 3.32 3.18 0.14 ❑LAIF Yield ❑RDA Yield Standard and Poors LAIF Page 5 of 8 Palm Desert Redevelopment Agency Portfolio Holdings 31 August 2005 Market Par Value I Issuer lCouponj Maturity I Cost I YTM I Price I Value 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 IS 12,317,000 Subtotal Commercial Paper -- Discount S 3,028,000 GENERAL ELECTRIC 0.00 S 3,028,000 GENERAL ELECTRIC 0.00 $ 6,056,000 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 IS 20,926,000 Subtotal Local Government Investment Pool S 40,000,000 L.A.I.F. 0.00 S 5,761,496 L.A.I.F. (HOUSING) 0.00 S 14,561,637 L.A.I.F. BOND PROCEEDS 0.00 $ 160,090 L.A.I.F. BOND PROCEEDS 0.00 $ 60,483,223 Subtotal Local Government Investment Pool S 14,260,355 C.A.M.P. 0.00 $ 14,260,355 Subtotal Money Market Fund $ 23.279,546 AIM 0.00 $ 23,279,546 Subtotal Total Investments $ 137,322,124 Ratings Moody'si S & P 25-Jan-07 $ 3,065,115 4.85 100.89 $ 3,026,592 Baa3 BB+ 1-Feb-06 $ 3,566,796 3.94 100.67 S 3,548,449 Baa3 BB+ 15-Mar-06 $ 2,939,416 3.52 101.15 S 2,929,266 Aaa AAA 15-Mar-06 S 2,939,416 3.52 101.15 S 2,929,266 Aaa AAA $ 12, 510, 741 3.97 $ 12, 433, 573 15-Sep-05 S 2,999,470 3.28 99.55 $ 3,014,303 P-1 A-1+ 15-Sep-05 S 2,999,470 3.28 99.55 $ 3,014,303 P-1 A-1+ $ 5,998,939 3.28 S 6,028,607 17-Sep-07 $ 2,952,561 3.43 97.31 $ 2,919,375 Aaa AAA 14-Sep-07 $ 2,994,386 3.82 98.72 $ 2,961,563 Aaa AAA 15-Mar-06 $ 2,990,374 3.42 99.28 $ 2,983,402 Aaa AAA 15-Mar-07 $ 3,065,928 3.38 101.28 $ 3,038,438 Aaa AAA 15-Sep-06 $ 2,974.913 3.60 99.66 $ 2,963,777 Aaa AAA 15-Sep-06 $ 2,975,081 3.60 99.66 $ 2,963,777 Aaa AAA 15-Mar-07 $ 2,976.202 3.95 99.47 $ 2,957,206 Aaa AAA $ 20,929,445 3.60 S 20,787,536 1-Sep-05 S 40,000,000 3.18 100.00 $ 40.000,000 U U 1-Sep-05 $ 5,802,366 3.18 100.00 S 5,802,366 U U 1-Sep-05 $ 14,827,783 3.18 100.00 $ 14,827,783 U U 1-Sep-05 $ 160,090 3.18 100.00 $ 160.090 U U $ 60,790,239 3.18 $ 60,790,239 1-Sep-05 $ 14,260,355 3.27 100.00 S 14,260,355 U AAA $ 14,260,355 3.27 $ 14,260,355 1-Sep-05 $ 23,279.546 3.12 100.00 $ 23,279,546 $ 23,279,546 3.12 $ 23,279,546 S 137,769,265 3.32 $ 137,579,856 Aaa AAA ` "U" = Unrated Page 6 of 8 Palm Desert Redevelopment Agency Portfolio Holdings 31 August 2005 Par Value Issuer Cash $ 1,376,552 HOUSING AUTH CHKG $ 334.804 HOUSING AUTH TRUST S 1,711,356 Subtotal Total Investments and Cash $ 139,033,480 Market Ratings lCouponj Maturity I Cost I YTM I Price I Value I Moody'sl S& P 0.00 1-Sep-05 $ 1,376,552 0.00 100.00 $ 1,376,552 N/A N/A 0.00 1-Sep-05 $ 334,804 0.00 100.00 S 334,804 N/A N/A $ 1,711,356 $ 1,711,356 Corporate Issuers GENERAL ELECTRIC CAPITAL CORPORATION FORD MOTOR CREDIT CORPORATION $ 139,480,621 % of Portfolio (Market Value) 4.82% 4.30% $ 139,291,212 "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 31 August 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 mo-iths. 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 28 September 2005, A,/. T. City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS ICalifornia Government Code I City Investment Policy CA Govt Maximum Maximum Quality Maximum Maximum Quality % of City 00 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 I I C.C°. 1 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 Agencies 5 Years No Limit 5 Years 30% 600 20.4% 15.2`•� 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 0.7'. 4. ?° 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 53601(j) Medium -Term Notes 5 Years 30% A 5 Years 30% A 12 3'' 9.1 % 53601(k) Mutual Funds 90 Days 20% AAA & Aaa 90 Days 20% (2) 1 AAA & Aaa1 6.7% I 16.9°r 53601(I) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) Local Government AAA & Aaa I AAA & Aaa Investment Pools 90 Days 20% or Advisor 90 Days 20% (2) I or Advisor l 12.0°, 10.4 53601(n) Mortgage -Backed 5 Years 20% A (Issuer) & Not Authorized Securities AA (Security) LAW No Limit No Limit 26 40� 44.1 (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. I 78 3°� ! 100.0'c (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds Certified California Municipal Treasurer Page 8 of 8