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S&P - Public Finance Criteria (2007). - The Global Clearinghouse

S&P - Public Finance Criteria (2007). - The Global Clearinghouse

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Cross Sector <strong>Criteria</strong>■ Washington Metropolitan Area Transit Authorityguaranteed transit bonds.(2) Federal Housing Administration debentures.(3*) Certain obligations of government-sponsoredagencies that are not backed by the full faithand credit of the United States. As Standard &Poor’s does not explicitly rate all these obligations,they must be limited to instruments that have a predeterminedfixed dollar amount of principal due atmaturity that cannot vary. If it is rated, the obligationshould not have an ‘r’ suffix attached to its rating.For non-defeasance investments, interest mayeither be fixed or variable. If the investments maybe liquidated prior to their maturity, or are beingrelied on to meet a certain yield, additional restrictionsare necessary. Interest should be tied to a singleinterest rate index plus a single fixed spread (ifany) and move proportionately with that index.<strong>The</strong>se investments are limited to:■ Federal Home Loan Mortgage Corp. (FHLMC)debt obligations;■ Farm Credit System (formerly Federal LandBanks, Federal Intermediate Credit Banks, andBanks for Cooperatives) consolidated systemwidebonds and notes;■ Federal Home Loan Banks (FHL Banks) consolidateddebt obligations;■ Federal National Mortgage Association (FNMA)debt obligations;■ Student Loan Marketing Association (SLMA)debt obligations;■ Financing Corp. (FICO) debt obligations; and■ Resolution Funding Corp. (REFCORP)debt obligations.(4) Certain federal funds, unsecured certificatesof deposit, time deposits, banker’s acceptances, andrepurchase agreements having maturities of notmore than 365 days, of any bank, the short-termdebt obligations of which are rated ‘A-1+’ byStandard & Poor’s. In addition, the instrumentshould not have an ‘r’ suffix attached to its ratingand its terms should have a predetermined fixeddollar amount of principal due at maturity thatcannot vary or change. Interest may either be fixedor variable. If the investments may be liquidatedprior to their maturity or are being relied on tomeet a certain yield, additional restrictions are necessary.Interest should be tied to a single interestrate index plus a single fixed spread (if any) andshould move proportionately with that index.(5) Certain deposits that are fully insured by theFederal Deposit Insurance Corp. (FDIC). <strong>The</strong>deposit’s repayment terms have a predetermined fixeddollar amount of principal due at maturity that cannotvary or change. If rated, the deposit should nothave an ‘r’ suffix attached to its rating. Interest mayeither be fixed or variable. If the investments may beliquidated prior to their maturity or are being reliedon to meet a certain yield, additional restrictions arenecessary. Interest should be tied to a single interestrate index plus a single fixed spread (if any) andshould move proportionately with that index.(6) Certain debt obligations maturing in 365 daysor less that are rated ‘AA-’ or higher by Standard &Poor’s. <strong>The</strong> debt should not have an ‘r’ suffixattached to its rating and by its terms have a predeterminedfixed dollar amount of principal due atmaturity that cannot vary or change. Interest can beeither fixed or variable. If the investments may beliquidated prior to their maturity or are being reliedon to meet a certain yield, additional restrictionsare necessary. Interest should be tied to a singleinterest rate index plus a single fixed spread (if any)and should move proportionately with that index.(7) Certain commercial paper rated ‘A-1+’ byStandard & Poor’s and maturing in 365 days orless. <strong>The</strong> commercial paper should not have an ‘r’suffix attached to its rating and by its terms havea predetermined fixed dollar amount of principaldue at maturity that cannot vary or change.Interest may either be fixed or variable. If theinvestments may be liquidated prior to their maturityor are being relied on to meet a certain yield,additional restrictions are necessary. Interestshould be tied to a single interest rate index plus asingle fixed spread (if any) and should move proportionatelywith that index.(8) Investments in certain short-term debt ofissuers rated ‘A-1’ by Standard & Poor’s may bepermitted with certain restrictions. <strong>The</strong> totalamount of debt from ‘A-1’ issuers must be limitedto the investment of monthly principal andinterest payments (assuming fully amortizing collateral).<strong>The</strong> total amount of ‘A-1’ investmentsshould not represent more than 20% of the ratedissue’s outstanding principal amount and eachinvestment should not mature beyond 30 days.Investments in ‘A-1’ rated securities are not eligiblefor reserve accounts, cash collateral accounts,or other forms of credit enhancement in ‘AAA’rated issues. In addition, none of the investmentsmay have an ‘r’ suffix attached to its rating. <strong>The</strong>terms of the debt should have a predeterminedfixed dollar amount of principal due at maturitythat cannot vary. Interest may either be fixed orvariable. If the investments may be liquidatedprior to their maturity or are being relied on tomeet a certain yield, additional restrictions arenecessary. Interest should be tied to a singleinterest rate index plus a single fixed spread (ifany) and should move proportionately with thatindex. Short-term debt includes commercialpaper, federal funds, repurchase agreements,52 Standard & Poor’s <strong>Public</strong> <strong>Finance</strong> <strong>Criteria</strong> <strong>2007</strong>

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