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Home My WebLink AboutCity and RDA - Investment Report - September 2005City of Palm Desert City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT ' September 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 September 20th, and raised the Federal Funds Rate by 25 basis points ("b.p.") to 3.75 percent. This was the 11th consecutive rate hike, Laving overnight interest rates at their highest level since July 2001. Although the FOMC recognized that Hurricane Katrina had caused significant short-term economic damage, it believed that any long-term consequences would be negligible. The FOMC's chief concern was that "... higher energy and other costs have the potential to add to inflation pressures." The bottom line is that the FOMC will continue to raise interest rates, and risk slower economic growth, in order to contain inflation, and cool off the housing market. The financial markets have already priced in a Federal Funds Rate of 4.50 percent by March 2006. Fannie Mae was in the headlines again. Investigators disclosed that they had uncovered "new and pervasive accounting violations" at Fannie Mae. This included allegations of manipulating earnings by overvaluing assets, understating credit losses, and misusing tax credits, as well as purchasing insurance to conceal earnings losses after -the -fact. In order to comply with regulatory capital requirements. Fannie Mae has been shrinking its portfolio, thereby reducing its funding requirements. President Bush nominated Benjamin Bernanke, chairman of the White House Council of Economic Advisers, to succeed Alan Greenspan as chairman of the Federal Reserve. Financial markets viewed this development favorably since it is expected that Bernanke will continue many of Greenspan's policies. Treasurer PORTFOLIO STATISTICS Dollars in Thousands SE_P-0'5 AUG-05 JULY-05 JUNE-05 MAY-05 APR-05 CITY Month -End Book Value— S ' 49,C8 i $ 153,545 $ 151,176 S 150,073 S 172,413 $ 145,753 Month -End Market Value— $ 148,892 $ 153,380 $ 150,936 $ 149,868 $ 172,196 $ 145,498 Paper Gain (Loss) $ (189) S (165) S (240) S (205) $ (217) $ (255) Prior Year Book Variance 16 961 $ 16,570 $ 9,725 $ 7,656 $ 46,510 $ 15,413 Interest Earnings $ z3l $ 444 $ 437 $ 377 $ 359 $ 321 Yield -To -Maturity 3.56`.* 3.43% 3.34% 3.29% 3.06% 2.94% Weighted Maturity (Days) 2 ! 1 208 216 220 134 166 Effective Duration 0.35 0.36 0.40 0.43 0.21 0.25 RDA Month -End Book Value "' S 1 26.0-! 8 S 139,481 S 143,968 $ 146,433 $ 124,373 $ 125:433 Month -End Market Value "" $ 125,695 $ 139,291 $ 143,916 S 146,296 $ 124,233 $ 125,251 Paper Gain (Loss) $ (323) $ (190) $ (52) $ (137) $ (140) $ (182) Prior Year Book Variance S (33.3�2) $ (21,638) $ (31,342) $ (38,476) $ (52,270) $ (27,263) Interest Earnings $ 3711 $ 374 $ 386 $ 366 $ 302 S 286 Yield -To -Maturity 3.420c 3.320/0 3.15% 3.09% 2.93% 2.8000 Weighted Maturity (Days) 153 146 142 140 101 101 Effective Duration 0.27 0.27 0.28 0.30 0.21 0.22 — Omits SLGSs. City of Palm Desert -- Portfolio Characteristics 30 September 2005 Dollars in Thousands Aqeinq Interval Market Value T �� General Fund Ageing < 1M S 62,351 <2M100 ?. 1�• I < 3M 1,979 < 6M 3,024 I I 80 < 1YR 2 -264 I o 66 < 2YR 22 51 J c 60 _ I' < 3YR - ° 0 40 < 4YR a 24 < 5YR 20 ^ 2 2 ^ ^ 0 > 5YR _ 0 Total: $ 94,455 < 1 M < 2M < 3M < 6M - < 1 YR < 2YR < 3YR Ratings * Market Value Credit Quality r AAA f 38% AAA S 55.709 Unrated " 72.785 BB+ 700 Unrated " AA 8.089 A-1 50% A-1 999 1 %AA BB+ 0,170 4° ° Total: S 145,752 (Asset Allocation Sector Market Value MMFs 27.890 LAW RDA Loan LAI F 40.000 270 o 22% RDA Loan 32.785 MTNs 18,228 MMFs Agencies 25,850 19% MTNs CID 999 13°0 CID Agencies Total: $ 145,752 1°�0 % 18% , Month Citv Yield I-AIF Yield Variance Performance Oct04 1.96 1.89 0.07 Nov 2.08 2.00 0.08 3.6 Dec 2.26 2.20 0.06 Jan05 2.54 2.26 0.28 Feb 2.66 2.37 0.29 3.0 r - Mar 2.79 2.54 0.25 d t 24 Apr 2.94 2.72 0.21 r May 3.06 2.86 0.21 Jun 3.29 2.97 0.32 1.8 - -- Jul 3.37 3.08 0.29 Oct04 Nov DecJan05 Feb Mar Apr May Jun Jul Aug Sep Aug 3.43 3.18 0.25 Sep 3.56 3.32 0.24 101 ❑ Standard and Poors LAIF, and City Loan to RDA Page 2 of 8 IPar Value City of Palm Desert Portfolio Holdings 30 September 2005 Market Issuer Coupon I Maturity Cost YTM I Price I Value Medium -Term Notes $ 3,000,000 BANK ONE $ 3,000.000 FORD MOTOR CREDIT CORP $ 2,500,000 FORD MOTOR CREDIT CORP S 4.612,000 FORD MOTOR CREDIT CORP S 2,000,000 GENERAL ELECTRIC S 3.000,000 GOLDMAN SACHS 1 $ 18,112,000 Subtotal Commercial Paper - Discount $ 1,000,000 GENERAL ELECTRIC Is 1,000,000 Subtotal Federal Agencies -- Discount S 2,060,000 FED HOME LOAN BANK $ 2,020,000 FED HOME LOAN BANK $ 2,000,000 FED HOME LOAN MTG CORP $ 1,023,000 FED NATIONAL MTG ASSOC $ 1,630,000 FED NATIONAL MTG ASSOC IS 8,733,000 Subtotal Federal Agencies -- Coupon S 3,000,000 FED HOME LOAN BANK $ 1,500,000 FED HOME LOAN BANK $ 2,035,000 FED HOME LOAN MTG CORP $ 2,009,000 FED HOME LOAN MTG CORP $ 2,786,000 FED NATIONAL MTG ASSOC $ 3,000,000 FED NATIONAL MTG ASSOC S 3,000,000 FED NATIONAL MTG ASSOC $ 17,330,000 Subtotal Local Government Investment Pool $ 40,000,000 L.A.I.F. S 40,000,000 Subtotal Local Government Investment Pool $ 18,214,438 C.A.M.P. M $ 18,214,438 Subtotal Money Market Fund $ 9,675,615 AIM $ 9,675,615 Subtotal "U" = Unrated Ratings Moody'sIS & P 4.13 9/1/07 S 3,026,301 3.64 99.38 S 2,981.277 Aa3 A+ 7.20 6/15/07 $ 3,065,204 5.75 100.57 S 3,017,166 Baa3 BB+ 7.20 6/15/07 S 2,554,336 5.75 100.57 $ 2,514,305 Baa3 BB+ 7.20 6/15/07 $ 4,765,423 5.10 100.57 $ 4,638,390 Baa3 BB+ 3.13 11/9/06 $ 1,982.989 3.92 98.42 $ 1,968,462 Aaa AAA 7.20 3/1/07 $ 3,150,244 3.50 103.60 $ 3,107,919 Aa3 A+ S 18,544,497 4.66 $ 18,227,519 0.00 10/7/05 $ 987,206 3.38 99.93 S 999,259 P-1 A-1+ $ 987,206 3.38 $ 999,259 0.00 3/20/06 $ 2,000,681 3.59 98.15 $ 2,021,890 Aaa AAA 0.00 10/14/05 $ 1,999.019 3.36 99.89 $ 2,017,778 Aaa AAA 0.00 12/13/05 $ 1,967,042 3.49 99.26 S 1,985,200 Aaa AAA 0.00 1 /18/06 S 999,798 3.54 98.86 $ 1,011,338 Aaa AAA 0.00 1 1 /15/05 $ 1,607,855 3.44 99.56 $ 1,622,828 Aaa AAA $ 8,574,395 3.48 $ 8,659,034 3.70 8/15/07 $ 2,995,053 3.79 98.78 $ 2.963,438 Aaa AAA 2.10 10/13/06 $ 1,474,642 3.79 97.75 S 1,466,250 Aaa AAA 2.50 12/4/06 $ 2,004,097 3.84 97.88 $ 1,991,756 Aaa AAA 1.88 2/15/06 $ 1,995,843 3.67 99.19 $ 1,992.677 Aaa AAA 7.13 3/15/07 $ 2,925,062 3.55 103.81 S 2,892,216 Aaa AAA 3.00 8/15/07 S 2,967,005 3.63 97.53 $ 2,925,938 Aaa AAA 2.75 8/11/06 $ 2,973,280 3.81 98.63 $ 2,958,750 Aaa AAA $ 17,334,981 3.72 S 17,191,024 0.00 10/1/05 $ 40,000,000 3.32 100.00 $ 40,000,000 U U $ 40,000,000 3.32 S 40,000,000 0.00 10/1/05 $ 18.214,438 3.43 100.00 $ 18,214,438 U AAA S 18,214,438 3.43 $ 18,214,438 0.00 10/1/05 $ 9,675,615 3.27 100.00 S 9,675,615 Aaa AAA $ 9,675,615 3.27 $ 9,675,615 Page 3 of 8 City of Palm Desert Portfolio Holdings 30 September 2005 jPar Value I Issuer I Coupon I Maturity I Cost City Loan to RDA $ 32,785,480 CITY OF PALM DESERT 0.00 S 32,785,480 Subtotal Total Investments $ 145,850,533 Cash S 2,170,079 CITY MAIN CHKG 0.00 S 496,820 DESERT WILLOW CHKG 0.00 $ 297,408 RECREATIONAL FAC CHKG 0.00 $ 2,964,308 Subtotal Total Investments and Cash S 148,814,841 Corporate Issuers Market YTM I Price I Value 10/1/35 S 32,785,480 3.32 100.00 S 32,785,480 $ 32,785,480 3.32 $ 32,785,480 S 146,116,611 3.56 S 145,752,369 Ratings Moody'sl S & P U U I 10/1/05 S 2,170,079 0.00 100.00 $ 2,170,079 N/A N/A 10/1/05 S 496,820 0.00 100.00 $ 496,820 N/A N/A 10/1/05 S 297,408 0.00 100.00 $ 297,408 N/A N/A $ 2,964,308 S 2,964,308 FORD MOTOR CREDIT CORPORATION GENERAL ELECTRIC CAPITAL CORPORATION GOLDMAN SACHS BANK ONE $ 149,080,919 $ 148,716,677 % of Portfolio (Market Value) 6.84% 2.00% 2.09% 2.00% "U" = Unrated Page 4 of 8 Palm Desert Redevelopment Agency -- Portfolio Characteristics 30 September 2005 Dollars in Thousands Aaeina Interval Market Value Portfolio Ageing w/o SLGSsI < 1 M 5 48,72C f i < 2M < 3M - 100 90 < 6M -1 2 390 80 I < 1YR 5.C28 0 70 59 < 2YR 'r!.503 < 3YR 0 50 E 40 < 4YR CO 30 15 18 < 5YR 20 10 0 0 0 0 > 5YR 0 I I I�1 I I Total: $ 81,941 < 1 M < 2M < 3M < 6M < 1 YR < 2YR < 3YR < 4YR Quality Market Value Credit Quality AAA 56,703 Unrated " C-0,790 AAA 46% Unrated A-1 49% BB+ 6543 BB(+Z, - Total: $ 124,041 5% 00, Sector Market Value Asset Allocation CP LAIF 60,790 0% MMFs 30 160 LAIF 490..0 Agencies 20 7C3 ji ';.'. MMFs C P - 24% MTNs 12.388 Treasuries - MTNs Agencies Total: $ 124,041 100'01 17", Month RDA Yield LAW Yield Variance Performance Oct04 1.73 1.89 -0.16 Nov 1.84 2.00 -0.17 3.6 Dec 2.00 2.20 -0.20 _ I Jan05 2.23 2.26 -0.03 3.1 �- Feb 2.37 2.37 0.00 Mar 2.58 2.54 0.04 .y 2.6 - Apr 2.80 2.72 0.08 r 2.1 May 2.93 2.86 0.07 Jun 3.09 2.97 0.13 1.6 Jul 3.21 3.08 0.13 Oct04 Nov Dec Jan05 Feb Mar Apr May Jun Jul Aug Sep Aug 3.32 3.18 0.14 1 - ❑LAIF Yield ❑RDA Yield S� 3.42 3.'2 0.1C Standard and Poors LAIF Page 5 of 8 Palm Desert Redevelopment Agency Portfolio Holdings 30 September 2005 Market Par Value Issuer lCouponj Maturity I Cost YTM I Price Value Ratings Moody'sI S & P Medium -Term Notes $ 3,000,000 FORD MOTOR CREDIT CORP 6.50 1/25/07 $ 3,061,239 4.85 100.12 $ 3,003,489 Baa3 BB+ $ 3,525,000 FORD MOTOR CREDIT CORP 6.88 2/1/06 $ 3,558,437 3.94 100.41 $ 3,539,424 Baa3 BB+ S 21896,000 GENERAL ELECTRIC 6.38 3/15/06 $ 2,932,702 3.52 100.92 $ 2,922,632 Aaa AAA S 2,896,000 GENERAL ELECTRIC 6.38 3/15/06 $ 2,932,702 3.52 100.92 $ 21922,632 Aaa AAA $ 12,317,000 Subtotal $ 12,485,079 3.97 $ 12,388,177 Federal Agency -- Coupon S 3,000,000 FED FARM CREDIT BANK 2.63 9/17/07 $ 2,954,495 3.43 96.81 $ 2,904,375 Aaa AAA $ 3.000,000 FED HOME LOAN BANK 3.38 9/14/07 $ 2,994,615 3.82 98.16 $ 2,944,688 Aaa AAA S 3,005,000 FED HOME LOAN BANK 2.50 3/15/06 $ 2,992,636 3.42 99.28 $ 2,983,402 Aaa AAA $ 3,000,000 FED HOME LOAN MTG CORP 4.88 3/15/07 S 3,062,358 3.38 100.72 $ 3,021,563 Aaa AAA $ 2,974,000 FED HOME LOAN MTG CORP 3.63 9/15/06 $ 2,974,840 3.60 99.31 S 2,953,554 Aaa AAA $ 2,974.000 FED HOME LOAN MTG CORP 3.63 9/15/06 S 2,974,994 3.60 99.31 $ 2,953.554 Aaa AAA $ 2,973,000 FED NATIONAL MTG ASSOC 3.63 3/15/07 $ 2,976.028 3.95 98.97 $ 2,942,341 Aaa AAA $ 20,926,000 Subtotal S 20,929,967 3.60 $ 20,703,475 Local Government Investment Pool $ 40,000.000 L.A.I.F. 0.00 10/1/05 $ 40,000,000 3.32 100.00 S 40,000,000 U U $ 5,802,366 L.A.I.F. (HOUSING) 0.00 10/1/05 S 5,802,366 3.32 100.00 $ 5,802,366 U U $ 14,827,783 L.A.I.F. BOND PROCEEDS 0.00 10/1/05 $ 14,827.783 3.32 100.00 $ 14,827,783 U U S 160,090 L.A.I.F. BOND PROCEEDS 0.00 10/1/05 $ 160,090 3.32 100.00 $ 160,090 U U $ 60,790,239 Subtotal $ 60,790,239 3.32 S 60,790,239 Local Government Investment Pool $ 28,872,864 AIM p S 28,872,864 Subtotal Money Market Fund $ 1,286,295 C.A.M.P. $ 1,286,295 Subtotal Total Investments $ 124,192,398 0.00 10/1/05 S 28,872,864 3.27 100.00 $ 28,872,864 $ 28,872,864 3.27 $ 28,872,864 0.00 10/1/05 $ 1,286,295 3.43 100.00 $ 1.286,295 $ 1,286,295 3.43 $ 1,286,295 S 124,364,444 3.42 $ 124,041,050 Aaa AAA I U AAA I Cash $ 1.323,605 HOUSING AUTH CHKG 0.00 10/1/05 $ 1,323,605 0.00 100.00 $ 1,323,605 N/A N/A $ 330,205 HOUSING AUTH TRUST 0.00 10/1/05 S 330,205 0.00 100.00 $ 330,205 N/A N/A $ 1,653,810 Subtotal $ 1,653,810 $ 1,653,810 "U" = Unrated Page 6 of 8 I Par Value Total Investments and Cash $ 125,846,208 Palm Desert Redevelopment Agency Portfolio Holdings 30 September 2005 Issuer lCouponj Maturity Corporate Issuers FORD MOTOR CREDIT CORPORATION GENERAL ELECTRIC CAPITAL CORPORATION Market Cost YTM I Price I Value $ 126,018,253 $ 125,694,859 % of Portfolio (Market Value) 5.21 % 4.65% Ratings Moody'sI s & P "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 September 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 26 October 2005, 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 (f) 53601(b) U.S. Treasuries 5 Years No Limit 5 Years I No Limit I I ro.D" :.c) 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 300% 6% 17.7'; 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"%o 3.0°-o 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 300% A 12.7`; i D.0c,. 53601(k) Mutual Funds 90 Days 20°o AAA & Aaa 90 Days 20% (2) iAAA & Aaal 6.6`, l 23.2°o 53601(I) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) Local Government AAA & Aaa l l AAA & Aaa l Investment Pools 90 Days 20% or Advisor 90 Days 20% (2) or Advisor 12.5`;, l 1.040 53601(n) Mortgage -Backed 5 Years 20°o A (Issuer) & Not Authorized Securities AA (Security) LAIF No Limit I No Limit (1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council. (2) Maximum limit for mutual funds and local government investment pools, excluding bond proceeds. 77.64c i DLW. ,c Certified California Municipal Treasurer Page 8 of 8