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New York
City Municipal Water Finance Authority
Investment Guidelines
Adopted April 10, 1986
Amended August 10, 1993
| Table of Contents | ||
I.
Purpose
B. Scope. These Guidelines specify the policies
and procedures relating to the investment, monitoring and reporting of funds
of the Authority. For purposes of these Guidelines, funds of the Authority
are all monies and other financial resources available for investment by
the Authority on its own behalf or on behalf of any other entity or individual.
All such monies shall be invested at all times to the fullest extent practicable,
and in accordance with the requirements and restrictions set forth in these
Guidelines.[back to top]
C. Review and Amendment. These Guidelines shall
be reviewed and approved by the Board of Directors annually and may be amended
by the Board of Directors from time to time.[back to top]
(2) (a) Any bonds or other obligations which as to principal and interest
constitute direct obligations of, or are guaranteed by, the United States
of America, including obligations of any agency thereof or corporation
which has been or may hereafter be created pursuant to an Act of Congress
as any agency or instrumentality of the United States of America to
the extent unconditionally guaranteed by the United States of America
or (b) any other receipt, certificate or other evidence of an ownership
interest in obligations or in specified portions thereof (which may
consist of specified portions of the interest thereon) of the character
described in paragraph (a) of this paragraph (2) ("Federally Guaranteed
Securities");
(3) Obligations of any agency, subdivision, department, division or
instrumentality of the United States of America; or obligations fully
guaranteed as to interest and principal by any agency, subdivision,
department, division or instrumentality of the United States of America
("Federal Agency Securities");
(4) Banker's acceptances or certificates of deposit issued by a commercial
bank with its principal place of business within the State and having
capital and surplus of more than $100,000,000 ("Banker's Acceptance/Certificates
of Deposit");
(5) Corporate securities, including commercial paper and fixed income
obligations, which are, at the time of purchase, rated by a Rating Agency
in its highest rating category for comparable types of obligations ("Corporate
Securities"); and
(6)(a) For Funds other than the Debt Service Funds and Subordinated
Indebtedness Funds: Repurchase agreements ("Repurchase Agreements")
collateralized by securities described in paragraphs (2) or (3) above,
with any government bond dealer reporting to, trading with, and recognized
as a primary dealer by the Federal Reserve Bank of New York and included
in the then current "List of the Government Securities Dealers Reporting
to the Federal Reserve Bank of New York" (a "Primary Dealer") or with
any domestic commercial bank whose long-term debt obligations are rated
"investment grade" by each Rating Agency then maintaining a rating on
the Bonds, provided that (a) a specific written repurchase agreement
governs the transaction, (b) the securities are held, free and clear
of any lien, by the Trustee or an independent third party acting solely
as agent for the Trustee, and such third party is (i) a Federal Reserve
Bank, or (ii) a bank which is a member of the Federal Deposit Insurance
Corporation and which has combined capital, surplus and undivided profits
of not less than $25 million, and the Trustee shall have received written
confirmation from such third party that it holds such securities, free
and clear of any lien, as agent for the Trustee, (c) the repurchase
agreement has a term of thirty days or less, or the Trustee will value
the collateral securities no less frequently than monthly and will liquidate
the collateral securities if any deficiency in the required collateral
percentage is not restored within five business days of such valuation,
and (d) the fair market value of the collateral securities in relation
to the amount of the repurchase obligation, including principal and
interest, is equal to at least 102%;
(6)(b) For the Debt Service and Subordinated Indebtedness Funds: Repurchase
Agreements collateralized by securities described in paragraph (2) above,
with any Primary Dealer or with any domestic commercial bank whose long-term
debt obligations are rated "investment grade" by each Rating Agency
then maintaining a rating on the Bonds, provided that (a) a specific
written repurchase agreement governs the transaction, (b) the securities
are held, free and clear of any lien, by the Trustee or an independent
third party acting solely as agent for the Trustee, and such third party
is (i) a Federal Reserve Bank, or (ii) a bank which is a member of the
Federal Deposit Insurance Corporation and which has combined capital,
surplus and undivided profits of not less than $25 million, and the
Trustee shall have received written confirmation from such third party
that it holds such securities, free and clear of any lien, as agent
for the Trustee, (c) the repurchase agreement has a term of thirty days
or less, or the Trustee will value the collateral securities no less
frequently than weekly and will liquidate the collateral securities
if any deficiency in the required collateral percentage is not restored
within five business days of such valuation, and (d) the fair market
value of the collateral securities in relation to the amount of the
repurchase obligation, including principal and interest, is equal to
at least 103%;
(7) investment agreements or guaranteed investment contracts with any
financial institution whose senior long term debt obligations, or whose
obligations under such an investment agreement or guaranteed investment
contract, are guaranteed by a financial institution whose senior long
term debt obligations, have a rating (at the time such agreement or
contract is entered into) in one of the two highest rating categories
for comparable types of obligations by each Rating Agency then maintaining
a rating on the bonds ("Investment Agreements");
(8) money market funds rated in the highest rating category for comparable
types of obligations by each Rating Agency then maintaining a rating
on the Bonds ("Money Market Funds")
(9) municipal obligations, the payment of principal and redemption price,
if any, and interest on which is irrevocably secured by obligations
of the type referred to in paragraphs (1), (2) or (3) above and which
obligations have been deposited in an escrow arrangement which is irrevocably
pledged to the payment of such municipal obligations and which municipal
obligations are rated in the highest rating category for comparable
types of obligations by each Rating Agency then maintaining a rating
on the Bonds ("Prerefunded Municipal Obligations").[back
to top]
C. Other Funds. Subject to the restrictions set forth in Section II(B)
above, monies in any other funds which may be established by the Authority
may be invested in any of the securities described in paragraphs 1 through
9 of Section II(A) hereof.[back to top]
B. Diversification. Investments of Authority
monies in the funds specified below shall be subject to the diversification
restrictions set forth below:
Debt
Service Reserve Funds:
1.
State Guaranteed
Securities
0-60%
2.
Federally Guaranteed
Securities
0-100%
3.
Federal Agency
Securities
0-100%
4.
Banker's Acceptances
0-60%
5.
Certificates
of Deposit
0-60%
6.
Corporate Securities
0-60%
7.
Repurchase Agreements
0-50%
8.
Collateralized
Investment Agreements
0-50%
9.
Uncollateralized
Investment Agreements
0-40%
10.
Money Market
Funds
0-50%
11.
Prerefunded Municipal
Obligations
0-100%
Construction
Funds and all other Funds in which the amount on deposit
at the time of making the investment exceeds $5 million:
1.
State
Guaranteed Securities
0-60%
2.
Federally
Guaranteed Securities
0-100%
3.
Federal
Agency Securities
0-100%
4.
Banker's
Acceptances
0-60%
5.
Certificates
of Deposit
0-60%
6.
Corporate
Securities
0-60%
7.
Repurchase
Agreements
0-100%
8.
Collateralized
Investment Agreements
0-100%
9.
Uncollateralized
Investment Agreements
0-50%
10.
Money
Market Funds
0-50%
11.
Prerefunded
Municipal Obligations
0-100%
Amounts on deposit in these Funds, although available for payment of
debt service on Bonds and Notes in the event of a default, are not expected
to be used to pay debt service. Also, amounts in the Construction Funds
are generally disbursed to pay the costs of Projects within six months
of the date of deposit therein and would virtually always be disbursed
within two years. In light of the foregoing, the Authority has determined
that it is appropriate to permit up to 100% of the amounts on deposit
in these Funds to be invested in Repurchase Agreements and Collateralized
Investment Agreements.[back to top]
2. For the Reserve Funds: No more than 20% of each Reserve Fund (determined
at the time of investment) shall be invested in Repurchase Agreements
or collateralized Investment Agreements with a single counterparty and
no more than 15% of each such Fund (determined at the time of investment)
shall be invested in uncollateralized Investment Agreements with a single
counterparty.
3. For all Funds in which the amount on deposit at the time of making
the investment exceeds $5 million: Except for Repurchase Agreements,
collateralized Investment Agreements, Prerefunded Municipal Obligations,
Federal Agency Securities and Federally Guaranteed Securities, no more
than 15% (determined at the time of investment) of the investments made
from such fund or account may be invested in securities of a single
issuer or in an uncollateralized Investment Agreement with a single
counterparty.[back to top]
E. Custodial Arrangements.
2. The Custodial Bank will, upon instructions of the Trustee, release
to the Treasurer of the Authority all purchased securities including
those subject to repurchase. This will permit the Authority to sell
such securities, if necessary.
3. Collateral securities shall not be held by an institution having
a depository relationship with the Authority.[back
to top]
b. In Municipal Securities: any broker, agent or dealer registered
with the Municipal Securities Rulemaking Board (the"MSRB").
3. Investment Bankers: firms retained by the Authority to serve as senior
managing underwriters for negotiated sales must be registered with the
MSRB.
4. Custodians: any bank or trust company organized under the laws of
any state of the United States of America or any national banking association
which qualifies as a Depository under Section 512 of the General Resolution
and Section 513 of the Second General Resolution.[back
to top]
B. Annually.
2. Investment Report. Annually, the Executive Director shall prepare
and the Board of Directors shall review and approve an Investment Report,
which shall include:
b. An explanation of the Guidelines and any amendments made since
the last report;
c. The independent audit report required by Subsection (1) above;
d. The investment income record of the Authority for the fiscal
year; and
e. A list of fees, commissions or other charges paid to each investment
banker, broker, agent, dealer and advisor rendering investment
associated services to the Authority since the last report. The
Investment Report shall be submitted to the New York State Department
of Audit and Control, and to the Mayor and Comptroller of the City
of New York. Copies of the annual report shall also be made available
to the public upon reasonable request.
These Guidelines shall govern all investments initiated by the Authority on and
after April 17, 1998 and shall not apply to any investments initiated by the Authority
prior to April 17, 1998. Nothing contained in these Guidelines shall be deemed
to alter, affect the validity of, modify the terms of or impair any contract,
agreement or investment of funds made or entered into in violation of, or without
compliance with, the provisions of these Guidelines.[back to
top]
| * | Unless otherwise indicated, all capitalized terms shall have the meaning set forth in the General Resolution or the Second General Resolution, as appropriate. BACK TO PART II |
New
York City Municipal Water Finance Authority
75 Park Place, 6th Floor, New York, NY 10007
212-788-5889 (tel) — 212-788-9197 (fax)