TEXT-Fitch:San San Bernardino, Calif. bankruptcy has no effect on cty's investment pool
July 12 - The 'AAA/V1' fund credit and volatility ratings assigned to the San Bernardino County Investment Pool (CA) remain unaffected by the City of San Bernardino bankruptcy filing on July 11, 2012. The San Bernardino County Investment Pool is managed by the San Bernardino County Treasurer's Office on behalf of the county, local school districts and other special districts. The city has not been participating in the pool. As of May 31, 2011, the pool had approximately $4.1 billion in assets under management. POOL STRUCTURE AND LIQUIDITY The pool is comprised almost entirely of monies held by the San Bernardino County Treasurer on behalf of school districts, community college districts, and certain special districts within the county. Because the city was not a pool's depositor, there will be no unexpected cash outflows related to the city bankruptcy filing. The captive nature of the investor base allows the pool to invest in longer-dated maturity-matching eligible securities and immunizes large scheduled cash outflows such as payroll. Nonetheless, the pool manages liquidity risk conservatively and maintains $300 million in securities maturing overnight, with at least $100 million in securities maturing within seven days. As of May 31, 2012, the pool had 18% of its portfolio in overnight securities. INVESTMENT OBJECTIVES The San Bernardino County Investment Pool's primary investment objective is to safeguard investment principal. The secondary objective is to maintain sufficient liquidity to ensure that funds are available to meet daily cash flow requirements. The third consideration is to achieve a reasonable rate of return or yields consistent with the first two objectives. INVESTMENT POLICIES The pool invests in U.S. Treasury and government agency securities, U.S. money market funds and other money market instruments including commercial paper, certificates of deposit, bankers' acceptances and corporate medium-term notes. Per its statement of investment policy, the pool must be invested in securities rated at least 'F1' or 'AA' by Fitch or equivalent. As of May 31, 2012, approximately 58% of the pool's portfolio was invested in securities issued or guaranteed by the U.S. government, 25% was in bank certificates of deposit, 12% was in short-term obligations of financial and non-financial corporations, 3% was allocated to domestic money market funds, and 2% in repurchase agreements. As of the same date, the weighted average credit quality of the fund, as measured by Fitch's weighted average rating factor (WARF), was 0.142, which is in line with Fitch's 'AAA' fund credit rating criteria guidelines. For additional information about Fitch bond fund rating guidelines, please review the criteria referenced below, which can be found on Fitch's website.
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