Fitch reaffirms city portfolio’s ‘AAA/V1′ rating

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Fitch Ratings has reaffirmed the AAA/V1 rating of the city of Colorado Springs fund for government operations, known as the Colorado Investment Portfolio.

This is the highest-quality rating a portfolio can receive from Fitch, a global ratings agency.

Cutwater Asset Management manages the city’s fund, which is overseen by Terri Velasquez, the city’s chief financial officer.

The city’s portfolio has maintained this rating since 1998, Velasquez said. Fitch rates this portfolio annually.

Fitch attributed the fund’s high rating to the diversification of the portfolio’s assets and the capabilities of Cutwater as the investment adviser.

A fund’s volatility rating is based on appropriate levels of liquidity –  relative to expected cash outflows – as well as the stability of its market-risk profile, as reflected by fund duration.

The fund’s ‘AAA’ portion of the rating means the fund is not highly vulnerable to losses as a result of defaults in a bond-fund portfolio. The fund’s ‘V1′ rating means it has a low market-risk and is likely to meet anticipated cash-flow requirements, even in an adverse interest-rate environment.

As of Jan. 31, the portfolio has about $90 million in assets under management; 92 percent of the portfolio was invested in U.S. instrumentality securities, while 8 percent was invested in the Colorado Local Government Liquid Asset Trust, a local government investment pool, which is also rated AAA/V1 by Fitch, according to a BusinessWire press release.

Currently, the city’s portfolio is comprised almost entirely of sales and property tax revenue and other city revenue.  The city’s investment policy requires the portfolio to maintain at least 5 percent of its total assets in short-term investments, or those that mature in less than 30 days. As of Jan. 31, 8 percent of the portfolio’s assets matured overnight, Velasquez said.