Chapter 04. Policy Regarding the Investment of Public Money by the State of Maryland

“Investment officer” means:

“Local government unit” means a county, a municipality, a community college, the Washington Suburban Sanitary Commission, a public corporation authorized to issue debt, and an authority of the State authorized to issue debt.

“Nationally recognized statistical rating organization” means a nationally recognized statistical rating organization as designated by either the United States Securities and Exchange Commission or the Treasurer.

Public Money.

“State Treasurer” means the Treasurer of the State of Maryland.

“Supranational issuer” includes (without limitation):

Act with the care, skill, and diligence that a prudent investor acting in a like capacity and familiar with such matters would use considering the circumstances then prevailing;

Make investments in a manner designed to reasonably match anticipated cash flow needs so that sufficient funds are available to pay obligations upon proper presentation for payment;

Make investments so that a reasonable amount of cash or cash equivalents is available for unanticipated cash needs;

Consider the context of the assets available for investment as a whole and as part of an overall investment strategy that incorporates reasonably suitable risk and return objectives;

Have due regard for minimizing risk while maximizing return;

Use competitive purchasing practices except when impractical;

Make investments so that the securities and collateral may continue to be priced on a marked to market basis;

Act in a manner designed to diversify investments unless, under the circumstances, it is reasonably determined to be in the best interests of the State or local government not to do so;

Act with prudence in deciding whether and how to delegate authority and in the selection and supervision of agents;

Incur only costs that are appropriate and reasonable in amount; and

Act to avoid the enhancement of the personal financial position of the investment officer or any employee of the State Treasurer or local government unit who has responsibilities for such investments.

An obligation for which the United States has pledged its faith and credit for the payment of the principal and interest;

An obligation that a federal agency or a federal instrumentality has issued in accordance with an act of Congress;

An obligation issued and unconditionally guaranteed by a supranational issuer denominated in United States dollars and eligible to be sold in the United States;

A repurchase agreement collateralized in an amount not less than 102 percent of the principal amount by an obligation of the United States, its agencies, or instrumentalities, provided the collateral is held by a custodian other than the seller designated by the buyer;

Bankers’ acceptances guaranteed by a financial institution with a short–term debt rating in the highest letter and numerical rating by at least one nationally recognized statistical rating organization;

Commercial paper that has received the highest letter and numerical rating by at least two nationally recognized statistical rating organizations;

Money market mutual funds that:

Any investment portfolio created under the Maryland Local Government Investment Pool defined under Local Government Article, §§17–301—17–309, Annotated Code of Maryland, that is administered by the Office of the State Treasurer;

Tradeable time deposits denominated in U.S. dollars and issued or endorsed by either:

Obligations of domestic corporations that are rated A-/A3/A- or higher by at least two nationally recognized statistical rating organizations;

Bonds, notes, or other obligations issued by or on behalf of any state or any agency, department, county, municipal or public corporation, special district, authority, or political subdivision thereof, or in any fund or trust that invests only in securities issued by these entities that are rated A-/A3/A- or higher by at least two nationally recognized statistical rating organizations;

Bonds, notes, or other obligations denominated in United States dollars, issued by and subject to the laws of a foreign country that is rated AA/Aa/AA or higher by at least two nationally recognized statistical rating organizations;

Mortgage-backed obligations:

Asset-backed obligations having received the highest possible rating from at least two nationally recognized statistical rating organizations; and

Non-tradeable time deposits denominated in U.S. dollars and:

For a security permitted by §A(1) of this regulation, 100 percent;

For a security permitted by §A(2) of this regulation, 100 percent;

For a security permitted by §A(3) of this regulation, 40 percent;

For a security permitted by §A(4) of this regulation, 75 percent;

For a security permitted by §A(5) of this regulation, 20 percent;

For a security permitted by §A(6) of this regulation, 35 percent;

For a security permitted by §A(7) of this regulation, 50 percent;

For a security permitted by §A(8) of this regulation, 100 percent;

For a security permitted by §A(9) of this regulation, 35 percent;

For a security permitted by §A(10) of this regulation, 25 percent;

For a security permitted by §A(11) of this regulation, 25 percent;

For a security permitted by §A(12) of this regulation, 20 percent;

For a security permitted by §A(13) of this regulation, 25 percent;

For a security permitted by §A(14) of this regulation, 25 percent; and

For a security permitted by §A(15) of this regulation, 35 percent.

The Governor of the State of Maryland has declared a state of emergency in accordance with Public Safety Article, §14-107, Annotated Code of Maryland; or

A catastrophic event occurs that the State Treasurer determines could dramatically shift credit ratings on any of the assets in the portfolio; and