(A) Investment types and credit guidelines. Consistent with the GFOA Policy Statement and Kentucky laws and city ordinances concerning investment practices the investments as defined by KRS 66.480, are allowed. KRS 66.480(2) restricts overall investment in KRS 66.480(1)(e), (f), (g), (k), and (l) of the following types of securities to 20% of total local government investments:
(1) U.S. government obligations and instrumentalities including obligations subject to repurchase, if delivery of these obligations is taken directly or through an authorized custodian. (See also KRS 66.480(1)(a))
(2) U.S. Treasury and other U.S. government obligations that carry the full faith and credit guarantee of the United States for the payment of principal and interest. (See also KRS 66.480(1)(b))
(3) Federal Agency or U.S. government-sponsored enterprises (GSE) obligations, participations or other instruments. (See also KRS 66.480(1)(c))
(4) CDs issued by or other interest-bearing accounts of any bank or savings and loan institution having a physical presence in Kentucky and that are insured by the Federal Deposit Insurance Corporation or similar entity or that are collateralized by any obligations, including surety bonds, permitted by KRS 41.240. (See also KRS 66.480(1)(d))
(5) Uncollateralized CDs issued by any bank or savings and loan having a physical presence in Kentucky rated in one of three highest categories by a competent rating agency. (See also KRS 66.480(1)(e))
(6) Bankers' acceptances, which must be rated in one of the three highest categories by a competent rating agency. (See also KRS 66.480(1)(f))
(7) Commercial paper, rated in the highest tier (e.g., A-I, P-l, F-l, or D 1 or higher) by a competent rating organization. KRS 66.480(1)(g).
(8) Bonds or certificates of indebtedness of this state and of its agencies and instrumentalities. (See also KRS 66.480(1)(h))
(9) Investment-grade obligations of state or local governments or instrumentality thereof rated one of three highest categories by a competent rating agency. (See also KRS 66.480(1)(i))
(10) Shares of mutual funds and exchange traded funds as identified by KRS 66.480(1)(j).
(11) Individual equity securities if the funds are managed by a professional investment manager regulated by a federal regulatory agency and are included within the S&P 500 pursuant to KRS 66.480(1)(k).
(12) Individual high-quality corporate bonds managed by a professional investment manager pursuant to KRS 66.480(1)(l).
(B) Important note. If the credit rating of a security is subsequently downgraded below the minimum rating level for a new investment of that security, the Designated Officials shall evaluate the downgrade on a case-by-case basis in order to determine if the security should be held or sold. The Designated Officials will apply the general objectives of safety, liquidity, yield and legality to make the decision.
(C) Collateralization. Where allowed or required by Kentucky law full collateralization will be required on all demand deposit accounts, including checking accounts and negotiable (as authorized by respective state statutes) and non-negotiable certificates of deposit.
(D) Authorized collateral. Acceptable collateral for bank deposits and repurchase agreements shall include only:
(1) Obligations of the U.S. government, its agencies and GSEs, including mortgage-backed securities; and
(2) Obligations of any state, city, county or authority rated at least AA by two nationally recognized statistical rating organizations.
(Ord. 19-11, passed 9-10-19)