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32

City of Raleigh

Financial Section

Interest Rate Risk

.

   As a means of limiting its exposure to fair value losses arising from rising interest rates, the 

City’s investment policy limits direct investment of operating funds to securities maturing no more than five years 

from the date of purchase.   Investments shown with a maturity date greater than five years are pursuant to N.C.G.S 

147‐69.2 and represent accounts holding the City’s capital reserves, risk reserve funds, and Law Enforcement 

Officer’s special separation allowance fund.  Also, the City’s investment policy requires purchases of securities to be 

laddered with staggered maturity dates to meet the operating requirements of each individual fund and cash flow 

requirements of the city’s overall operations.  Reserve funds invested by external asset managers are not required to 

meet liquidity needs within the short‐term and may have maturities generally consistent with benchmark indices 

established to monitor performance of the asset managers.   

Credit Risk

.

  State law limits investments in commercial paper to the top rating issued by nationally recognized 

statistical rating organizations (NRSROs).  The City limits investments to the provisions of G.S. 159‐30 and restricts 

the purchase of securities to the highest possible ratings whenever particular types of securities are rated.   The City 

currently holds investments with long‐term credit ratings as follows: 

Bank

S & P

Moodyʹs

Fitch

Bank of North Carolina (certificates of deposit)

N/A

NA

N/A

NCCMT ‐ Cash Portfolio

AAAm N/A

N/A

US Agencies 

AA+

Aaa

AAA

Long‐term Credit Ratings

Concentration of Credit Risk

.

 The City’s investment policy does not restrict the level of investment in federal 

agencies, but it restricts investment in commercial paper or bankers’ acceptances of a single issuer to no more than 

5.0% of the total investment portfolio.  As of June 30, 2016, there are no investments in Commercial paper within the 

City’s investment portfolio.  

Fiduciary funds are reported on a stand‐alone basis and are not presented in the government‐wide statement of net 

position. 

A summary of cash and investments at June 30, 2016 is as follows: 

Government‐wide

Fiduciary

Total 

Petty cash and change funds

17,505

$                  

$                        

17,505

$                  

Deposits (checking, money market)

35,562,112

35,562,112

Fiduciary cash

80,335,494

80,335,494

Investments

780,753,141

780,753,141

Total cash and cash equivalents

816,332,758

80,335,494

896,668,252

Restricted deposits and bond proceeds

135,081,195

135,081,195

Total cash 

951,413,953

$         

80,335,494

$           

1,031,749,447

$      

Investment results shown in the financial statements are a combination of actual interest received, realized gains and 

losses on current year activity, and unrealized gains and losses as of the balance sheet date.   

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