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Federal Highway Grant Anticipation Bond (GARVEE) Investment Guidelines

This policy is intended to accomplish the stated objectives while ensuring compliance with state and federal laws as well as the "Trust Agreement By and Between The State of New Hampshire and The Bank of New York Mellon Trust Company, N.A., as Trustee" dated as of October 20, 2010. This policy is also designed to strengthen the internal controls over the safeguarding of Federal Highway Grant Anticipation Bond proceeds.

Investment Objective

Federal Highway Grant Anticipation Bond proceeds will be invested to:

  1. Preserve the value and safety of the principal,
  2. Maintain liquidity appropriate to meet the estimated cash flow needs of the New Hampshire Department of Transportation, and
  3. Optimize the rate of return on investments consistent with the goals of safety and liquidity.

This policy applies only to Federal Highway Grant Anticipation Bond proceeds. It does not apply to any other funds administered by the State Treasury, including but not limited to, funds belong to the State of New Hampshire, funds held in Trust by the State of New Hampshire, or New Hampshire Turnpike System funds (including separate accounts pursuant to its indentures).

Federal Highway Grant Anticipation Bond proceeds shall, to the fullest extent practicable, be invested, either alone or jointly, with moneys in any other Fund or Account, by or at the written direction of an individual having signatory authority on the account the funds are held in. Permitted Investments are those which shall mature or be redeemable at the option of the holder thereof, on such dates and in such amounts as may be necessary to provide liquidity to meet the payment obligations required, and to meet the cash flow needs of the New Hampshire Department of Transportation.

Levels of Authority

  1. The Treasurer is authorized to invest the Federal Highway Grant Anticipation Bond proceeds within the established guidelines and has also delegated this authority to the Deputy Treasurers and the Assistant Treasurer responsible for cash and investment management ("Assistant Treasurer").
  2. The Treasurer must approve purchases or sales of securities with a maturity of greater than 7 days and at a par value of over $5 million dollars in a single day.
  3. The Treasurer must approve any transfer of cash and investments equal to or greater than $20 million in a single transaction. In the Treasurer's absence, a Deputy Treasurer will provide such approval.
  4. The Treasurer, Deputy Treasurers, or Assistant Treasurer are authorized to approve purchases or sales of Permitted Investments. No formal approval is required for Permitted Investments in overnight or weekend repurchase agreements, which would be acquired as part of an overnight sweep (investment) program.

Accountability

  1. The Treasurer or designee is responsible for ensuring the completion of all documentation related to the execution and confirmation of increases and decreases to Permitted Investments, and for the maintenance of all necessary records of current holdings. This documentation shall include, but is not limited to, appropriate accounting and internal documents required to track the movement of funds through the State's financial system and the Treasury's banking system.
  2. The Treasurer or designee will document the rationale for each security transaction, including electronic communication.

Permitted Investments

Shall mean and include any of the following, if and to the extent the same are at the time legal for investment of State funds:

  1. Government Obligations;
  2. direct obligations of, or obligations guaranteed as to timely payment of principal and interest by, the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association or the Federal Farm Credit System;
  3. demand and time deposits in or certificates of deposit of, or bankers' acceptances issued by, any bank or trust company, savings and loan association or savings bank, if such deposits or instruments are rated in one of the two highest Rating Categories by any Rating Agency then maintaining a rating on any Bonds Outstanding and the long-term unsecured debt obligations of the institution holding the related account are rated in one of the two highest Rating Categories by any Rating Agency then maintaining a rating on any Bonds Outstanding;
  4. general obligations of, or obligations guaranteed by, any State of the United States or the District of Columbia rated in one of the two highest long-term Rating Categories by any Rating Agency then maintaining a rating on any Bonds Outstanding;
  5. commercial or finance company paper (including both non-interest-bearing discount obligations and interest bearing obligations payable on demand or on a specified date not more than one year after the date of issuance thereof) that is rated in one of the two highest Rating Categories by any Rating Agency then maintaining a rating on any Bonds Outstanding;
  6. repurchase obligations with respect to any security in clause (i) or (ii) above entered into with a broker/dealer, depository institution or trust company (acting as principal) meeting the rating standards described in clause (iii) above;
  7. securities bearing interest or sold at a discount that are issued by any corporation incorporated under the laws of the United States of America or any State thereof and rated in one of the two highest Rating Categories by any Rating Agency then Maintaining a rating on any Bonds Outstanding at the time of such investment or contractual commitment providing for such investment; provided, however, that securities issued by any such corporation will not be Permitted Investments to the extent that investment therein would cause the then outstanding principal amount of securities issued by such corporation that are then held to exceed 20% of the aggregate principal amount of all Permitted Investments then held;
  8. units of taxable money market funds which funds are regulated investment companies and seek to maintain a constant net asset value per share and have been rated in one of the two highest Rating Categories by any Rating Agency then maintaining a rating on any Bonds Outstanding;
  9. investment agreements or guaranteed investment contracts rated, or with any financial institution whose senior long-term debt obligations are rated, or guaranteed by a financial institution whose senior long-term debt obligations are rated, at the time such agreement or contract is entered into, in one of the two highest Rating Categories for comparable types of obligations by any Rating Agency then maintaining a rating on any Bonds Outstanding;
  10. investment agreements with a corporation whose principal business is to enter into such agreements if (a) such corporation and the investment agreements of such corporation are each rated in one of the two highest Rating Categories by any Rating Agency then maintaining a rating on any Bonds Outstanding and (b) the State has an option to terminate each agreement in the event that such rating is downgraded below such two highest Rating Categories; or
  11. any agreement providing for the purchase by the State or the Trustee of Permitted Investments described above from a financial institution at the time of execution of the agreement, from time to time during the term of the agreement or any combination thereof in exchange for valuable consideration from the financial institution which consideration may be (a) payable at the time of execution of the agreement, from time to time during the term of the agreement or any combination thereof, (b) expressed in terms of a yield to the State or the Trustee on the purchase of such Permitted Investments, (c) an agreement by the financial institution to purchase the Permitted Investments at a price specified in the agreement, or (d) in such other form as the State or the Trustee and the financial institution may agree; provided that, a specific written agreement governs the transactions; provided that no Permitted Investment may (a) evidence the right to receive only interest with respect to the obligations underlying such instrument or (b) be purchased at a price greater than par if such instrument may be prepaid or called at a price less than its purchase price prior to its stated maturity.

The following chart identifies the Permitted Investments for various Funds and Accounts which may be established to hold Federal Highway Grant Anticipation Bond proceeds.

GARVEE Trust Agreement "Permitted Investments"
  Funds/Accounts
Permitted Investments Redemption Fund Debt Service Fund Debt Service Fund
(series account)
Debt Service Fund
(defeasance account)
Bond Related Cost Fund Rebate Fund Project Fund
Government Obligations (i) X X X X X X X
Freddie Mac; Fannie Mae; Federal Farm Credit System (ii) X X X X X X X
Demand Deposits, Time Deposits, CDs, Bas (iii) X X X X X X X
GOs of any state of USA or DC (rated in top two categories) (iv) X X X X X X X
CP or FCP (rated in top two categories) (v) X       X X X
Repurchase Obligations "repos" (vi) X X X X X X X
USA Corporate Securities (rated in top two categories) (vii) X X X X X X X
Units of Taxable MM Funds (viii) X       X X X
Investment Agreements (rated in top two categories) (ix) X X X X X X X
Investment Agreements (rated in top two categories) (x) X       X X X
Financial institution agreements (xi) X X X X X X X

GARVEE Trust Agreement "Permitted Investments" table as PDF. pdf file

Other Considerations

Commingling Permitted Investments:
If Permitted Investments are commingled, appropriate records shall be maintained to account for the funds as if they were held separately. Permitted Investments purchased as an investment of moneys in any Fund or Account shall be deemed at all times to be a part of such Fund or Account and all losses from investment shall be charged against such Fund or Account.

Review

The Treasurer reviews and approves the investment guidelines at least biennially.

This policy was last reviewed and approved on April 7, 2016.

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New Hampshire State Treasury
25 Capitol Street, Room 121  |  Concord, NH 03301
(603) 271-2621  |  fax: (603) 271-3922
Abandoned Property:
(800) 791-0920 (in New Hampshire)  |  
(603) 271-2619