HomeMy WebLinkAboutNC Comprehensive Report (Finance) (43)CITY OF NATIONAL CITY
Notes to the Basic Financial Statements
(Continued)
(2) Cash and Investments, (Continued)
Investments Authorized by Debt Agreements
Investment of debt proceeds held by fiscal agent are governed by provisions of the debt
agreements, rather than the general provisions of the California Government Code or the
City's investment policy. The table below identifies the investment types that are
generally authorized for investments held by fiscal agent. The table also identifies certain
provisions of these debt agreements that address interest rate risk and concentration of
credit risk.
Authorized
Investment Type
Maximum Maximum
Maximum Percentage Investment
Maturity Allowed in One Issuer
U.S. Treasury Obligations None None None
U.S. Agency Securities None None None
Banker's Acceptances 360 days None None
Commercial Paper 270 days None None
Money Market Mutual Funds N/A None None
Investment Contracts 30 years None None
Certificates of Deposit None None None
Repurchase Agreements None None None
Mortgage Pass -Through Securities None None None
State Bonds or Notes None None None
Municipal Bonds or Notes None None None
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the
fair value of an investment. Generally, the longer the maturity of an investment, the
greater the sensitivity of its fair value to changes in market interest rates. One of the ways
that the City manages its exposure to interest rate risk is by purchasing a combination of
shorter term and longer term investments and by timing cash flows from maturities so
that a portion of the portfolio is maturing or coming close to maturity evenly over time as
necessary to provide the cash flow and liquidity needed for operations.
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