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NEW YORK (Standard & Poor's) Oct. 10, 2008--Standard & Poor's Ratings Services
said today that it assigned its 'AAAf' fund credit quality and 'S1' volatility
rating to the St. Lucie County Investment Portfolio.
The 'AAAf' fund credit quality rating is based on our analysis of the
credit quality of the Portfolio's eligible investments, the counterparties,
and overall management by the portfolio's investment managers. The 'AAAf'
rating signifies that the portfolio holdings provide extremely strong
protection against losses from credit defaults.
The 'S1' volatility rating signifies the fund's low sensitivity to
changing market conditions and a level of risk that is less than or equal to
that of a portfolio comprised of the highest quality fixed-income instruments
with an average maturity of one to three years. As part of our volatility
analysis, we assessed the Portfolio's management, portfolio-level risk, target
durations, and comparable return strategies.
The St. Lucie Board of County Commissioners establishes the overall
investment policies. The County's investments are subject to Florida Statutes
125.31 and Chapter 218.415 as stated in the Portfolio's Investment Policy.
This Code lays out conservative instructions concerning investment procedures
such as eligible securities, diversification, maturities, insurance, internal
controls, education requirements, and reporting. The Board of County
Commissioners of St. Lucie County must approve any changes to the Code.
The implementation for the Portfolio (currently $340 million) is
delegated to Edwin M. Fry, Jr., Clerk of the Circuit Court of St. Lucie. Mr.
Fry has been delegated the responsibility of establishing in-depth accounting
and investment procedures to direct the day-to-day investment activities
necessary to carry out the established investment policies.
The St. Lucie County Investment Portfolio's primary objective is safety,
liquidity, and investment income for its assets. Portfolio holdings are
typically comprised of highly rated securities, including U.S. Treasury and
government agency securities, rated money market funds, the 'AAAm' rated
Florida Local Government Investment Pool A, the 'AAAf' rated Florida Local
Government Investment Trust, and certificates of deposit from banks listed
under qualified public depositories as determined by the state of Florida and
state statutes.
The Clerk manages the short-term portion of the Portfolio's assets on a
day-to-day basis. In May 2008, the Clerk contracted with three subadvisors to
manage $105 million of the longer-term assets. The three subadvisors are
Capital Guardian, Public Financial Management, and Sawgrass Asset Management.
The longer-term assets are generally invested in U.S. Treasuries and agency
securities with an average duration of approximately two years.
Our fund credit quality rating scale ranges from 'AAAf' (highest level of
protection) to 'CCCf' (least protection). These ratings from 'AAAf' to 'CCCf'
may be modified by the addition of a plus (+) or minus (-) sign to show
relative standing within the major rating categories.
Volatility ratings range from lowest volatility ('S1', with certain funds
designated a plus sign [+] to indicate the fund's extremely low sensitivity to
changing market conditions) to highest volatility('S6'). The ratings are based
on an analysis of a fund's investment strategy and portfolio risk, including
interest rate risk, credit quality, liquidity, concentration, call and option
risk, and currency risk. The effects of various portfolio strategies, such as
the use of leverage, hedging, and derivative instruments, are also factored
into the ratings. We monitor fixed-income funds monthly to ensure the
consistency of the funds' credit quality and volatility profiles with the
assigned ratings.
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