HomeMy WebLinkAbout05/18/2021 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.
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RECOMMENDATION:
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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').
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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).
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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).
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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
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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
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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
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3-Vear Aqencv 0.3100% Broker dail runs
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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
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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