The table below identifies the investment types that are authorized for the City by the California Government Code and the City's investment policy. The table also identifies certain provisions of the California Government Code (or the City's investment policy, if more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City's investment policy.
| Investment TypesAuthorized by State Law | Authorized by Investment Policy | Maximum Maturity* | Maximum Percentage of Portfolio* | Maximum Investment in One Issuer* |
|---|---|---|---|---|
| United States Treasury Bills, Notes, Bonds | Yes | 5 years | 100% | none |
| Agency Securities | Yes | 5 years | 100% | 30% |
| California State and Local Agency Debt | Yes | 180 days | none | |
| Commercial Paper | Yes | 270 days | 25% | 10% |
| Negotiable Certificates of Deposit | Yes | 5 years | 5% | none |
| Time Certificates of Deposit | Yes | 5 years | 5% | none |
| Repurchase Agreements | Yes | 1 year | 10% | none |
| Medium-Term Corporate Notes | Yes | 5 years | 25% | 10% |
| Money Market Mutual Funds | Yes | 5 years | 20% | none |
| Local Agency Investment Fund (LAIF) | Yes | N/A | 75M/Acct | none |
| Structured Notes (STRIPS) | Yes | 5 years | 20% | none |
| Local Government Investment Pools | Yes | N/A | 1 | none |
* Based on state law requirements or City investment policy requirements, whichever is more restrictive.
The City Treasurer is authorized under state and municipal law to invest in various types of securities that meet specified credit quality standards, based upon credit risk ratings assigned by Standard and Poors (S&P), Fitch, or by Moody's Investor Services (Moody's). Permissible City investments include medium-term notes that are rated "A" or higher at time of purchase; commercial paper that is rated "A-1" or the equivalent; money market mutual funds that are rated "AAA"; and United States Government and Federal Agency securities (the quality of United States Treasury securities is not analyzed since they are not deemed to have credit risk).
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required, when applicable, by the California Government Code, the City's investment policy, or debt agreements, and the rating by Standard and Poor's, Fitch and Moody's as of year-end for each investment type.