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CITY OF EUGENE, OREGON
<br />Notes to Basic Financial Statements
<br />(4) Detailed Notes on All Funds, continued
<br /> (A) Equity in Pooled Cash and Investments, continued
<br />Investments, continued
<br />Credit Risk
<br />The City’s policy, which adheres to State of Oregon law, is to limit its Corporate and Municipal investments to
<br />the following: Issuers within Oregon must be rated “A” (bonds) or A-2 / P-2 (commercial paper) or better by
<br />Standard and Poor’s, Moody’s Investors Service or any other nationally recognized statistical rating
<br />organization. Issuers not in Oregon must be rated AA / Aa (bonds) or A-1 / P-1 (commercial paper) or better.
<br />At June 30, 2007, the City’s investments were rated as follows:
<br />Highest Rating From
<br />Moody's Investors Service or Standard & Poor's Corporation
<br />Investment typeTotalAaa/AAAAa/AAA/AP-1/A-1Not rated
<br />Corporate securities$40,531,9425,029,46226,922,3426,607,2421,972,8960
<br />Local government
<br /> investment pool6,779,29800 0 06,779,298
<br />Municipal bonds8,766,3338,766,3330 0 00
<br />U.S. agency securities106,667,317106,667,3170 0 00
<br />U.S. treasury securities4,048,2634,048,2630 0 00
<br />Total$166,793,153124,511,37526,922,3426,607,2421,972,8966,779,298
<br />The Oregon State Treasurer maintains the Oregon Short Term Fund (OSTF), of which the Local Government
<br />Investment Pool (LGIP) is a part. Participation by local governments is voluntary. The State of Oregon
<br />investment policies are governed by statute and the Oregon Investment Council. In accordance with Oregon
<br />Statutes, funds are invested as a prudent investor would do, exercising reasonable care, skill and caution.
<br />LGIP was created to offer a short-term investment alternative to Oregon local governments and it is not
<br />registered with the U.S. Securities and Exchange Commission. The investments are regulated by the OSTF
<br />and approved by the Oregon Investment Council (ORS 294.805 to 294.895). At June 30, 2007, the fair value
<br />of the City’s deposits with the LGIP approximates cost. The OSTF financial statements are available at
<br />http://ost.state.or.us.
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<br />The LGIP’s portfolio concentration of credit risk at June 30, 2007 included: Commercial Paper (31.0%),
<br />Corporate Bonds (17.9%), Certificates of Deposits (1.2%), U.S. Agency securities (49.0%) and Bank Notes
<br />(0.9%). The credit risk associated with the investments was: AAA rating (50.8%), AA rating (11.6%), A rating
<br />(34.2%), and not rated (3.4%).
<br />Concentration of Credit Risk
<br />The City’s policy for investing in individual issuers varies depending on the type of investments. Agency
<br />securities are restricted to no more than 25% for any one issuer. No more than 25% of the total portfolio of
<br />investments may be invested in a single issuer of bankers’ acceptances. Investments in commercial paper or
<br />corporate bonds of any one issuer may not exceed 5% of the investment portfolio. At June 30, 2007, more
<br />than 5% of the City’s portfolio was invested in Federal National Mortgage Association (17.5%), Federal Home
<br />Loan Mortgage Corporation (15.5%), Federal Home Loan Bank (14.6%), and Federal Farm Credit Bank
<br />(12.6%) securities.
<br />continued
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