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05/18/2021 04C April 2021 Investment Tracsactions ReportBUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDASTATEMENT Item No. 4.C. For Meeting of: May 18, 2021 ITEM TITLE: April 2021 Investment Transactions Report SUBMITTED BY: Steve Groom, Director of Finance and Budget SUMMARY EXPLANATION: This monthly report is in compliance with RCW 35.39.032 which requires "The responsible official or committee shall make a monthly report of all investment transactions to the city legislative authority". A complete Treasury report is provided to City Council quarterly that provides a complete position listing with further analysis, economic outlook, and strategy updates. Vill A IT, a --_I Fill M A I A -13 RECOMMENDATION: M Public Trust and Accountability Review only. Submitted for routine transparency and accountability. ATTACHMENTS: Description Upload Date Type D April 2021 Investment Transachons report 4/29/2021 Execubw Summary FINANCE DATE: April 29, 2021 TO: Mayor and City Council FROM: Steve Groom, Finance Director RE: April 2021 Investment Transactions The investment transactions for April 2021 were: Matured: • $1,000,000 FFCB April 15, 2021 Called: • $1,000,000 BNY April 6, 2021 (called 1 month early) Purchased: • $2,000,000 FFCB to mature July 19, 2023 • $2,000,000 US Treasury to mature May 19, 2024 The focus of investments now is to fill maturity gaps in a shortened (3-year maturity horizon, instead of 5-year pre-COVID) ladder to minimize reinvestment risk subject to rates at any one point in time and hedging against further decreasing rate exposure. During the current market volatility, the range of investment options for 1- to 3- year maturities during April fluctuated slightly, as the 1-year Treasury yield ranged between 0.05% to 0.08%. The 3-year area of the yield curve hovered between 0.31 % and 0.39%. The LGIP 30-day yield was 0.10 at 4/1 and 0.09% at 4/28. This monthly report of all investment transactions complies with RCW 35.39.032 ("The responsible official or committee shall make a monthly report of all investment transactions to the city legislative authority'). &MMEMMEOM Investment # 2021-1561 is a 2.25-year Federal Farm Credit Bank (FFCB), face value $2,000,000, maturing July 19, 2023, 0.20% coupon at 100-015 to yield 0.193%. This trade settles April 19, 2021 with Vining Sparks, US Bank Safekeeping, replacing one $1,000,000 April maturity in April and a May 2021 $1,000,000 called 1 month early. Liquidity: At March 31st, month -end, Key Bank checking account balance was $7.5 million (target minimum is $3 Million), US Bank checking balance was $3.7 million and investment portfolio was $36.0 million (target is $64 million for Treasuries, Corporates and Agencies). Current LGIP balance was $47.9 million (target minimum is $5 million). MU1 I L;MV1 @R;K401 I Lei I a wK.-ISPA 00L!tv ra vill (z IBM_ Yield. Yield is 0.19%. This investment is 9 basis points over LGIP, seeking to protect yield in an uncertain environment. LGIP's yield is expected to stay level over the next year. Comparable yields are: LGIP current 317q" yiielq__ 0.09916% III ?:year Trp su 0.1600% 3-year Treasury tO. 3 5-0 0 % Uallability. This investment is not callable (a bullet). g www.secureaccess.wa._9v Treasurv.aov Treasury-gov Diversification. This purchase brings this issuer to 13.0% of total portfoli(lo Outlook. The yield curve is currently low and flat; the 1 -year Treasury at 0.06%, the 2- year at 0.16% the 3-year at 0.35%, and the 5-year at 0.87%. The Federal Reserve BanH has been keeping rates low with uncertainty of a 2022 rate hike increasing. By filling WiligNPREIRM" - ag am=� MIT-141-11-11 WE= Date 4-1 0 2w _7 Date 44, t e, - 4 FINANCE Prior to CO VID, a 5-year ladder was employed, making the portfolio stable, predictable and forecastable. Due to sub-1% rates, purchases are now shortened to fill maturity gaps in a 3-year ladder to avoid locking in lower rates longer. At $2m per month, the current of is to ladder out $60M fairly evenly. City of Yakima Investment Portfolio Maturity Distribution - Mar 31, 2021 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 'p %41 VO 06 lzp. �10 0� 01 10 01�1 lj�' %1P 10 op� lzp` 1�p VO Q& �s 'IV 15c City of Yakima Nversification by Issuer - Mar 31, 2021 FA CA, $5,000,000,6% FNMA, $3,000,000,3% FHLMC, $1,000,000, 1% Apple, $1,0G0,000, 1% BNY, $- 0% USBancorp, $1,000,000, 1% Walmart, $1,000,000, 1% Microsoft, $1,000,000, 1% 4/15/2021 p. 2 of 4 2021-1561 Invest Rationale FFCB 07-2023 Investment # 2021-1562 is a 3-year US Treasury (UST), face value $2,000,000, maturing May 19, 2024, 2.00% coupon at 105-05 to yield 0.325%. This trade settles April 19, 2021 with Wedbush Securities, US Bank Safekeeping, replacing two • the several $1,000,000 maturities called during 2020. ;;-,afety: This purchase is a debt issue of the Federal government, equivalent to Aaa/AA+ • by ••t and S&P. Yield. Yield is 0.32%. This investment is 21 basis points over LGIP, seeking to prote -i• in an uncertain • LGIP's yield is expected to stay level • the ne year. Comparable yields are: LGIP current 30-day yi�eldd 0.096215% www.secureaccess.wa. ov 3-year corporate Unavailable in AA Treasurv.-qov Y-9-- 3-Vear Aqencv 0.3100% Broker dail runs 1:11:111;iiiii lri';Iin; INIT1117111 IrrIl I NZL�M Date y/iOz/ Date J A NOUN- 111BLOIrAwag. wwwougglAw':1 I, --I- T a E.— City of Yakima Investment Portfolio Maturity Distribution - Apr 30, 2021 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 City of Yakima Diversification by Issuer - Apr 30, 2021 0239Ti► it� FHLMC, $1,000,000, 1% Apple, $1,000,000, 1% USBancorp, $1,000,000, 1% Walmart, $1,000,000, 1% Microsoft, $1,000,000, 1% FINANCE 4/23/2021 p. 2 of 4 2021-1562 Invest Rationale LIST 05-2024