AgdaPkt 2021.02.22 Joint SA PFA - Laserfiche WebLink

Browse Search

6.B. - Page 3 of 41 PFM's investment strategy in the coming months will be to focus on new agency purchases in the maturities beyond three years as yield spreads on short maturities are now back to near pre -pandemic levels. The investment grade corporate market face concerns due a third wave of COVID-19 cases, rising geopolitical tensions, global slowdowns, a weaker dollar, and the presidential election. Asset-backed securities have outperformed treasuries: while risk factors include reduced federal unemployment benefits, which could increase delinquency rates, these factors remain well within an acceptable range based on PFM's stress tests. Taxable municipal bonds are one of the most attractive sectors available for purchase; PFM will remain focused on the largest issuers while exercising caution on many subsectors given the fiscal impact from COVID-19. PFM will continue to be selective when evaluating new issues in all the sectors. Interest rates are likely to stay ultra-low through the crisis, affecting the portfolio as investments mature and are reinvested in a lower interest rate environment. The current maturity distribution has less than 10% of the portfolio expected to mature within the next year, but PFM's strategy has been and will be to focus on security safety and liquidity, and they will continue to actively manage the portfolio in an effort to safely achieve market value growth over the long-term. PFM has provided an in-depth market summary and discussion on their investment strategy and outlook in the attached investment report. FISCAL IMPACT The City's portfolio received $1,968,891 in net interest earnings over the reporting period. All interest earnings are allocated monthly through a preset methodology that spreads earnings to the appropriate funds. Fees for PFM's services during this period were $26,475 and are deducted from the total interest earnings. There is no additional budget appropriation required. ENVIRONMENTAL REVIEW This activity is not a project under California Environmental Quality Act (CEQA) as defined in CEQA Guidelines, section 15378, because it has no potential for resulting in either a direct or reasonably foreseeable indirect physical change in the environment. PUBLIC NOTICE Public notification was achieved by posting the agenda, with the agenda items being listed, at least 72 hours prior to the meeting. After approval, the Investment Report will be posted on the City Website under Financial Information — Investments at the following link: Redwood City Investments Page 3 of 4 City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.ore 49