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BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. 4.C.
For Meeting of: June 15, 2021
ITEM TITLE: May2021 Investment Transactions Report
SUBMITTED BY: Steve Groom, Director of Finance and Budget
SUMMARY EXPLANATION:
This monthly Investment Transactions 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. Each investment is in full compliance with the City's Investment Policy, State Statues and
the City's Municipal Code.
ITEM BUDGETED: NA
STRATEGIC PRIORITY: Public Trust and Accountability
APPROVED FOR SUBMITTAL BY THE CITY MANAGER
RECOMMENDATION:
Review only. Submitted for routine transparency and accountability.
ATTACHMENTS:
Description Upload Date Type
CI ay in st ent re rt 12/2021 r Memo
2
FINANCE
DATE: June 1 , 2021
TO: Mayor and City Council
FROM: Steve Groom, Finance Director
RE: May 2021 Investment Transactions
The investment transactions for May 2021 were:
Matured:
• none
Called:
• none
Purchased:
• $2,000,000 US Treasury to mature July 31 , 2024
The investment purchase in May fills a maturity gap 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.
In 2020, the city had several callable maturities called, the proceeds of which were put in
the LGIP state pool. Reinvesting those maturities has been spread over several months
in order to spread the reinvestment risk, the risk of reinvesting at prevailing rates during
any one time.
During the current market volatility, the range of investment options for 1- to 3- year
maturities during May fluctuated slightly, as the 1-year Treasury yield ranged between
0.04% to 0.06%. The 3-year area of the yield curve hovered between 0.29% and 0.35%.
The LGIP 30-day yield was 0.09 at 5/1 and 0.07% at 5/31 .
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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FINANCE
Committee Review of Investment Rationale
Date: May 18, 2021
Investment # 2021-1563 is a 3-year US Treasury (UST), face value $2,000,000,
maturing July 31, 2024, 2.125% coupon at 105-20 to yield 0.351%. This trade settles
May 19, 2021 with Wedbush Securities, US Bank Safekeeping, reducing our elevated
LGIP position caused by maturities called during 2020.
Liquidity: At April 30th, month-end, Key Bank checking account balance was $4.8 million
(target minimum is $3 Million), US Bank checking balance was $6.8 million and
investment portfolio was $38.0 million (target is $64 million for Treasuries, Corporates
and Agencies). Current LGIP balance was $45.9 million (target minimum is $5 million).
Safety: This purchase is a debt issue of the Federal government, equivalent to Aaa/AA+
rating by Moody's and S&P.
Yield. Yield is 0.35%. This investment is 27 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 30-day yield 0.080712% www.secureaccess.wa. ov
3-year corporate Unavailable in AA Treasury.gov
3-year Agency 0.3500% Broker daily runs
Callability. This investment is not callable (a bullet).
Diversification. This purchase brings this issuer to 10.8% of total portfolio.
This purchase adds a maturity date previously not covered to city's laddered portfolio.
Outlook. The yield curve is currently low and flat; the 1-year Treasury at 0.04%, the 2-
year at 0.16% the 3-year at 0.34%, and the 5-year at 0.84%. The Federal Reserve Bank
has been keeping rates low with uncertainty of a 2022 rate hike increasing. By filling
maturity gaps in a shortened 3-year ladder, we minimize reinvestment risk subject to rates
at any one point in time and hedging against further decreasing rate LGIP exposure.
Investment Committee review:
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Finance Director: Date I /tic? 227(
City Manager: - Date L3-17--1 iz-62--f
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Prior to COVID, a 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 goal is to ladder out$60M fairly evenly.
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5/18/2021 p.2 of 4 2021-1563 Invest Rationale UST 07-2024