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CITY OF REDWOOD CITY <br />INVESTMENT POLICY <br /> draft update: 8/28/17 12 <br />Redwood City as the registered owner, and all interest and principal payments and withdrawals <br />shall indicate the City of Redwood City as the payee. <br /> <br />E. All bank deposits will be FDIC insured or deposited with institutions that comply with the <br />State collateral requirements for public funds. <br /> <br />F. Securities used as collateral for repurchase agreements with a maturity from one to seven days <br />can be held in safekeeping by a third-party bank trust department or by the <br />broker/dealer’s safekeeping institution, acting as the agent for the City, under the terms of a <br />custody agreement executed by the selling institution and by the City specifying the City’s right <br />to the collateral. <br /> <br />G. All investment transactions shall be conducted on a competitive basis with quotes from a <br />minimum of two brokers or financial institutions when possible. <br /> <br />XIV. Diversification and Credit Risk Management <br /> <br />A. Investments contained within the portfolio will be diversified by security type, institution and <br />maturity. <br /> <br />B. The diversification requirements included in Section IX are designed to mitigate credit risk in <br />the portfolio. <br /> <br />C. No more than 5% of the total portfolio may be invested in securities of any single issuer, other <br />than the US Government, its agencies and instrumentalities. For some investment types, a more <br />restrictive limit is specified in the policy. <br /> <br />D. The City may elect to sell a security prior to its maturity and record a capital gain or loss in <br />order to improve the quality, liquidity or yield of the portfolio in response to market <br />conditions or City’s risk preferences. <br /> <br />E. If securities owned by the City are downgraded by any nationally recognized statistical <br />ratings organization to a level below the quality required by this Investment Policy, it shall <br />be the City’s policy to review the credit situation and make a determination as to whether <br />to sell or retain such securities in the portfolio. <br /> <br />1. If a security is downgraded, the City Treasurer will use discretion in determining whether to <br />sell or hold the security based on its current maturity, the economic outlook for the issuer, <br />and other relevant factors. <br />2. If a decision is made to retain a downgraded security in the portfolio, its presence in <br />the portfolio will be monitored and highlighted in the monthly investment report. <br /> <br />XV. Maximum Maturities <br /> <br />A. The City Treasurer will maintain sufficient liquidity in cash and short-term investments, which <br />together with projected revenue receipts will meet the cash flow requirements of the City <br />for the upcoming six months. <br /> <br />6.1.B. - Page 38