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City of Redwood City 6.1.E. - Page 74 <br /> Notes to the Basic Financial Statements <br /> For the year ended June 30, 2015 <br /> NOTE 2—CASH AND INVESTMENTS(CONTINUED) <br /> Poor's or P-1 by Moody's Investor's Service, and corporate bonds to those rated A or better by Standard <br /> and Poor's or Moody's Investor's Service. <br /> Under the provisions of the City's investment policy, and in accordance with California Government Code, <br /> the following investments are authorized: <br /> Maximum Maximum <br /> Maxi mum Percentage of Investment in <br /> Authorized Investment Type Maturity Portfolio One Issuer <br /> Certificates of Deposit 1 year 7.50% $3 Million <br /> Banker's acceptances 180 days No limit $3 Million <br /> Treasury Bills, Notes and Bonds 3 years No limit No limit <br /> Government Agency Securities 3 years No limit No limit <br /> Commercial Paper 15 days No limit $1 Million <br /> Local Agency Investment Fund N/A No limit $40 Million <br /> Passbook Savings Accounts 1 year No limit $100,000 <br /> San Mateo County Investment Fund N/A No limit $40 Million <br /> Money Market/Mutual Funds N/A 10% No limit <br /> Corporate Notes 3 years 30% $5 Million <br /> The City's investments comply with the City's investment policy requirement that at least 50% of idle <br /> funds be placed in liquid investments (i.e. investments that can be sold for face value in the open <br /> market if needed) and investment amounts and maturities are closely monitored to ensure adequate <br /> cash flow. The City is not currently complying with the investment policy requirement that no more <br /> than 50% of idle funds be invested in securities with a maturity date greater than one year and no more <br /> than 25% of idle funds be invested in securities with a maturity date greater than two years. This is the <br /> result of three-year bonds being called early and not held to maturity. The City is adjusting its <br /> investment approach to purchase shorter term bonds and reviewing possible updates to its investment <br /> policy to bring investment practices, which are effectively achieving investment policy goals of liquidity <br /> and safety, into stricter compliance with policy. <br /> The City's investments are rated by the nationally recognized statistical rating organizations as follows: <br /> Moody's S&P Fitch <br /> U.S.Agencies,Securities,and Corporate Notes: <br /> Federal Home Loan Bank Aaa AA+ <br /> Federal National Mortgage Association Aaa AA+ AAA <br /> Federal Home Loan Mortgage Corporation Aaa AA+ AAA <br /> Federal Farm Credit Aaa AA+ AAA <br /> U.S.Treasury Securities Aaa AA+ AAA <br /> External Investment Pools: <br /> San Mateo County Investment Fund Not Rated AAAf/S1 Not Rated <br /> California Local Agency Investment Fund Not Rated Not Rated Not Rated <br /> Custodial Credit Risk. For an investment, custodial credit risk is the risk that, in the event of the failure <br /> of the counter party, the City will not be able to recover the value of its investments or collateral <br /> securities that are in the possession of an outside party. All securities, with the exception of the County <br /> Pool and LAIF, are held by third-party custodians (Union Bank of California Trust Division, U.S. Bank and <br /> 45 <br />