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FAC Meets with New State Money Manager
On February 12, FAC and other local government stakeholders met with the state’s new cash manager for the Local Government Investment Pool (LGIP) and State Board of Administration (SBA, Federated Securities Corporation. Federated has a long history as a cash manager dating back to 1973 and earlier. They manage more $300 billion in investments, with more than $230 billion of that in institutional cash management. Federated created the first institutional money market fund and currently manages $25 billion for TexPool, the state run local government investment pool in Texas. Federated will be managing cash for the LGIP as well as the cash components of the SBA’s other portfolios effective March 1.
Federated indicated that one of their top priorities is restoring investor confidence in the LGIP and they have identified a variety of methods they plan to pursue in communicating with and meeting with investors, past and present, to reestablish the pool as a viable cash option for local governments.
In addition, the LGIP Advisory Committee met in Tampa on February 15 and heard a similar presentation from Federated. Federated committed to conducting a long term liquidity analysis to determine the amount of funds likely to be available in the early-to-mid summer months, when many governments will need access to funds. They also agreed to investigate the prospect of swapping some of the AAA investments in Fund A with long durations, with AAA investments of shorter durations in other SBA managed portfolios, to create additional liquidity. Finally, Federated indicated a willingness to perform a recovery analysis of Fund B to determine the probability that each security in the fund will fully mature.