Page 157 - Yucaipa Valley Water District

Director Memorandum No. 18-003 Page 6 of 9

5. Bankers acceptances (otherwise known as bills of exchange or time drafts)
that are drawn on and accepted by a commercial bank which are eligible
for purchase by the Federal Reserve System. Such banker’s acceptances
may not exceed 180 days maturity. No more than forty percent (40%) of
the District’s money may be invested in such banker’s acceptances. No
more than thirty percent (30%) of the District’s money may be invested in
the banker’s acceptances of any one commercial bank. The commercial
bank shall have the highest short-term letter and numerical rating as
provided by Moody’s Investors Service, Inc. (“Moody’s”) or Standard &
Poor’s Rating Agency (“Standard & Poor’s”);

6. Commercial paper of “prime” quality of the highest ranking or of the highest
letter and number rating as provided for by a nationally recognized
statistical-rating organization (NRSRO). The entity that issues the
commercial paper shall meet all of the following conditions in either
paragraph (a) or paragraph (b):

(a) The entity is organized and operating in the United States as a
general corporation, and has total assets in excess of $500 million,
and has debt other than commercial paper, if any, that is rated “A”
or higher by a NRSRO.

(b) The entity is organized within the United States as a special
purpose corporation, trust, or limited liability company, has a
program wide credit enhancements including, but not limited to,
over collateralization, letters of credit or surety bond, and has
commercial paper that is rated “A-1” or higher, or the equivalent by
an NRSRO.

Commercial paper shall have a maximum maturity of 270 days or less. The
District may invest no more than twenty-five percent (25%) of its money in
such commercial paper. The District may purchase no more than ten
percent (10%) of the outstanding commercial paper of any single issuer;

7. Repurchase agreements with respect to securities described in paragraphs
(i) and (ii) above provided that the term of any such repurchase agreement
shall be one year or less. A repurchase agreement means a purchase of
securities by the District pursuant to an agreement by which the seller will
repurchase the securities on or before a specific date at an agreed upon
price, thereby establishing the yield during the District’s holding period.
The yield established for the repurchase agreement is determined by
current short-term rates and may be more or less than the interest rate on
the underlying securities. The securities underlying a repurchase
agreement is, in effect, collateral under the agreement and the securities
shall be (otherwise known as bills of exchange or time drafts) delivered to
the District by book entry, physical delivery or by third-party custodial
agreement. At the time a repurchase agreement is made, the underlying
securities shall be valued at one hundred and two percent (102%) or
greater of the repurchase price. If an agreement is in effect for more than
one day, and, in the event their value drops below one hundred and two
percent (102%) of the repurchase price, the seller to the repurchase

Yucaipa Valley Water District - January 16, 2018 - Page 155 of 287