Part Two: Strategies for Investing Bond Proceeds in Today’s Environment.
The goal of investing bond proceeds is to maximize interest income over the life of the project; maintaining the safety and liquidity is always necessary when investing public funds. Due to the complex and ever-changing nature of bond project spending schedules, investment of bond proceeds can require a little more thought than the traditional investment account.
Here are some strategies to consider when planning a strategy for the investment of your proceeds.
1. Invest Your Funds in a Local Government Investment Pool (LGIP) - If your project is short term in nature, LGIPs can provide both competitive yields and ample liquidity to satisfy your required draws.
2. Match Investments with Liabilities - Ideally, if you can match each investment with a corresponding draw from your draw schedule, you can attempt to optimize the amount of interest income for each specific draw.
3. Combined Approach - Combining a multi-tiered approach utilizing both the LGIP and liability matched investment programs may provide the most strategic approach. A combined approach will allow you to utilize a LGIP for draws in the near future as well as unexpected liabilities and fixed income securities to match draws with a longer time horizon.
The size, duration, and complexity of your bond project combined with the current investment environment play important roles in choosing a strategy for investment of the proceeds. The better you understand your project, the better you will be positioned to maximize interest income earned while investing the proceeds. Stay tuned for the final piece of the PUBLIC TRUST ADVISORS™ Bond Proceeds Series: Part Three: Other Considerations for Investing Bond Proceeds
If you would like to speak with a PUBLIC TRUST ADVISORS™ public funds investment professional regarding bond proceeds management, please email firstname.lastname@example.org and a local representative will be in touch.
*The information presented should not be used in making any investment decisions. The presentation is not a recommendation to buy, sell, implement, or change any securities or investment strategy, function, or process. Any financial and/or investment decision should be made only after considerable research, consideration and involvement with an experienced professional engaged for the specific purpose. All comments and discussion presented are purely based on opinion and assumptions, not fact, and these assumptions may or may not be correct based on foreseen and unforeseen events. All calculations and results presented are for discussion purposes only and should not be used for making calculations and/or decisions. Any financial and/or investment decision may incur losses.