N.M. Admin. Code § 2.60.25.13

Current through Register Vol. 35, No. 23, December 10, 2024

Section 2.60.25.13 - CASH INVESTMENT

A. Constitutional and statutory restrictions: The only short term securities purchased are those specifically authorized in the New Mexico statutes. Currently, commercial paper (CP), repurchase agreements (repos), and banker's acceptances (BA) are specifically identified in Sections 6-8-19 and 7-27-5.1 NMSA 1978. If in doubt as to whether a particular type of security is authorized, legal opinions are solicited from the state attorney general's office. CP must be rated prime by a national rating service. Repos must be collateralized at 102 percent or higher by obligations of the United States or other securities backed by the United States, and may only be purchased from broker/dealers that have a minimum net worth of $500 million. Banker's acceptances must be rated prime and issued by money center banks. Medium term notes (MTN) and other bonds must be rated at least A in the permanent fund (Section 6-8-9 NMSA 1978), and at least BBB in the severance fund (Section 7-27-5.1 NMSA 1978).

B. Council goals and policies:

(1) The council has adopted the following goals for the management of the short term investment program (STIP) portfolios:

(a) safety and preservation of STIP capital through the maintenance of well-diversified portfolios of short term investments with high credit quality;

(b) maintenance of STIP liquidity to support the long term investment programs; and

(c) maximization of STIP current income.

(2) Achievement of these goals by the state investment office will be pursued under the following policies:

(a) All corporate bonds purchased by the council under the STIP will be rated A or better.

(b) Stripped securities, or other securities that have abnormally low initial coupons, balloon payments, or other characteristics that make them difficult to price are not acceptable as collateral for repos.

(c) All possible fixed income trades will be done on a competitive basis to obtain the best possible pricing and execution.

N.M. Admin. Code § 2.60.25.13

Recompiled 10/1/01