Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO:
KRS 41.610,
42.014(1),
42.500,
42.505-42.545
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
42.500(10) requires the
State Investment Commission to promulgate administrative regulations for the
investment and reinvestment of state funds.
KRS
42.520(2) requires the
commission to promulgate administrative regulations concerning the assignment
of priorities to public depositories.
KRS
42.525 requires the State Investment
Commission to prescribe standards for the operation of the state's investment
program. This administrative regulation establishes the standards which shall
apply to the use of certain money market instruments which include bankers'
acceptances, commercial paper, and negotiable collateralized and
uncollateralized certificates of deposit.
Section
1. Definitions.
(1) "Bankers'
acceptance" means a short-term negotiable discount note drawn on and accepted
by a bank or trust company which is obligated to pay the face value amount at
maturity.
(2) "Commercial paper"
means an unsecured promissory obligation having a maturity of less than 270
days.
(3) "Commission" means the
State Investment Commission.
(4)
"NRSRO" means "Nationally Recognized Statistical Ratings Organization", which
is a credit rating agency that is registered with the Securities and Exchange
Commission, and which provides its opinion on the creditworthiness of an entity
and the financial obligations issued by that entity.
(5) "Office" means the Office of Financial
Management.
Section 2.
Bankers' Acceptances.
(1) The office may
purchase bankers' acceptances if rated in the highest short-term rating
category by an NRSRO.
(2) The
purchase of these instruments shall be:
(a)
Made on a delivery versus payment basis; and
(b) Held in the Commonwealth's account in
whatever depository shall be designated as eligible by the
commission.
(3)
(a) Investment in bankers' acceptances shall
be made for a period of no longer than 180 days per investment.
(b) The total amount of the investment in
this security shall not exceed the amount of twenty-five (25) million dollars
in one (1) institution at a time.
Section 3. Commercial Paper.
(1) The office may purchase commercial paper
rated in the highest short-term rating category by an NRSRO.
(2) The purchase of these instruments shall
be:
(a) Made on a delivery versus payment
basis; and
(b) Held in the
Commonwealth's account in whatever depository shall be designated as eligible
by the commission.
(3)
The investments in commercial paper shall be made for a period of no longer
than 270 days per investment and the total amount of the investment in this
security shall not exceed the amount of twenty-five (25) million dollars by any
issuer at a time.
Section
4. Negotiable Certificates of Deposit, Collateralized and
Uncollateralized.
(1) The office may purchase
collateralized certificates of deposit if issued by banks rated in one (1) of
the three (3) highest categories by an NRSRO.
(2) The office may purchase uncollateralized
negotiable certificates of deposit if issued by banks rated in one (1) of the
two (2) highest categories by an NRSRO or subject to
200 KAR
14:200.
(3) The purchase of these instruments shall
be:
(a) Made on a delivery versus payment
basis; and
(b) Held in the
Commonwealth's account in whatever depository shall be designated as eligible
by the commission.
(4)
(a) Investment in negotiable certificates of
deposits shall be made for a period of no longer than 270 days per investment
unless specifically authorized by
KRS 41.610.
(b) The total amount of investments in
certificates of deposit shall not exceed the amount of twenty-five (25) million
dollars in any one (1) institution at a time.
Section 5. Limit of Money Market Instruments
of the State's Total Portfolio. The aggregate investment in bankers'
acceptances, commercial paper, and negotiable certificates of deposit shall not
exceed thirty-five (35) percent of the Commonwealth's total investment
portfolio.
STATUTORY AUTHORITY:
KRS
42.500(10),
42.520(2),
42.525
