Marketable Securities - Soup to Nuts - Joe Pellegrino Vice President 5/3 Securities, Inc - Illinois Government ...
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Marketable Securities – Soup to Nuts
Joe Pellegrino Andrew Brown
Vice President Treasurer/Finance Director
5/3 Securities, Inc. Village of Tinley Park
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021
Fixed Income Product Offerings – 5 Different Asset Classes
✓ CDs
✓ Treasury Bonds
✓ Government Agency Bonds
✓ Municipal Bonds
✓ Commercial Paper / Corporate Bonds
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Fixed Income – Acronymns / Terminology / Lingo / Jargon
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021We Need to Use Our Professional Partners More in This Area
✓ Days of just Using CDs and Money Market Funds are in the Past
✓ Educate Ourselves More – Stay in Tune with Market
✓ Utilize/Lean on knowledge from Experts
✓ Add Diversification / Increase Yield Without Adding Much Incremental Risk
✓ Update/Amend Policies – Stay Current
✓ Ask Questions / Understand Better / Ignorance is Not Bliss
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Bond Ratings Bond Ratings
Moody’s S&P Fitch Credit Worthiness
Aaa AAA AAA An obligor has EXTREMELY STRONG capacity to meet its
financial commitments.
Aa1 AA+ AA+ An obligor has VERY STRONG capacity to meet its financial
commitments. It differs from the highest rated obligors only in small
Aa2 AA AA degree
Aa3 AA- AA-
A1 A+ A+ An obligor has STRONG capacity to meet its financial commitments
but is somewhat more susceptible to the adverse effects of changes in
A2 A A circumstances and economic conditions than obligors in higher-rated
categories
A3 A- A-
Baa1 BBB+ BBB+ An obligor has ADEQUATE capacity to meet its financial
commitments. However, adverse economic conditions or changing
Baa2 BBB BBB circumstances are more likely to lead to a weakened capacity of
the obligor to meet its financial commitments.
Baa3 BBB- BBB-
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021 5Illinois Public Funds Investment Act
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Illinois Public Funds Investment Act – Authorized Investments
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Guaranteed as to the Principal and Interest by Full Faith and
Credit of the United States of America
What 3 Instruments Guarantee the Full Faith and Credit of the US Government?
✓ FDIC Insured CDs
✓ US Treasuries
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Guaranteed as to the Principal and Interest by Full Faith and
Credit of the United States of America
What 3 Instruments Guarantee the Full Faith and Credit of the US Government?
✓ FDIC Insured CDs
✓ US Treasuries
✓ Ginnie Mae (GNMA) Securities
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021What Are Us Treasury Securities
U.S. Treasury securities—such as bills, notes and bonds—are debt
obligations of the U.S. government. When you buy a U.S. Treasury security,
you are lending money to the federal government for a specified period of
time.
Because these debt obligations are backed by the “full faith and credit” of
the government, and thus by its ability to raise tax revenues and print
currency, U.S. Treasury securities – or "Treasuries" – are generally
considered the safest of all investments.
They are viewed in the market as having virtually no “credit risk,” meaning
that it is highly probable your interest and principal will be paid fully and
on time
*Investinginbonds.com
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Treasury Securities
T-Bills
• Maturities less than 1yr
• Trade using a discount rate – Pay Interest at Maturity
• Usually mature on Thursdays
• Same or Next Day Settle
Treasury Notes
• Maturities between 1-10 years – Mature on 15th and Last Day of Month
• Coupon Bonds
• Pay Interest Semi-annually
• Same or Next Day Settle
Treasury Bonds
• Maturities between 10-30 years - Mature on 15th and Last Day of Month
• Coupon Bonds
• Pay Interest Semi-annually
• Same or Next Day Settle
Treasury Strips
• Maturities between 0-30 years
• Zero Coupon Bonds (No Interest Payments) / Bought at a Discounted Price
• Same or Next Day Settle
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Treasury Bills (T-Bills) – 8/18/21
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Treasury Bills (T-Bills) – Use Discount Rate
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Treasury Bonds – Benchmark 2yr, 3yr, 5yr, 7yr, 10yr, 20yr,30yr
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Treasury Notes (0-1yr) – 8/18/21
As of 4/2/19
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Treasury Notes (1-2yr) – 8/18/21
As of 4/2/19
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Treasury Notes (2-4yr) – 8/18/21
As of 4/2/19
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Treasury Notes (4-7yr) – 8/18/21
As of 4/2/19
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Treasury Notes (7-10yr) – 8/18/21
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Treasury Bonds (10-30yr) – 8/18/21
As of 4/2/19
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Illinois Public Funds Investment Act – Authorized Investments
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Government Sponsored Entities (GSE’s) – aka Government Agencies
4 Main Agencies
• Federal Home Loan Bank (FHLB)
• Federal Home Loan Mortgage Corporation (FHLMC) – Freddie Mac
• Fannie National Mortgage Corporation (FNMA) – Fannie Mae
• Federal Farm Credit Bank (FFCB)
What Do You Need to Know
• Commonly referred to as “Agencies” or “Agency Securities” or “Government Agencies”
• Credit Line with US Treasury
• “Implied” Guarantee or Backing of US Government – Same Ratings as UST’s
• Slight increase in yield over Treasuries - How Much? Depends on Maturity
• Same or Next Day Settle
How Issued
• Discount Notes (DISCOs) -Discount Note (DISCO)– Just like T-Bills – Use Discount Rate
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Non-Callable Government Agency (Bullet) – Description Page
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Non-Callable Government Agency (Bullet) – Trade Ticket
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Non-Callable Government Agency (Bullet) – Cashflow and Semi-
Annual Coupon Payments
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021US Treasury/Government Sponsored Agency Types /Ratings
Treasury Securities Issued S&P Moody’s Fitch
Treasuries Notes, bonds, T-Bills AA+ Aaa
GSE Securities Issued S&P Moody’s Fitch
Federal Home Loan Notes, bonds, AA+ Aaa
Bank (FHLB) discount notes
Federal Home Loan Notes, bonds, AA+ Aaa
Mortgage discount notes, MBS
Corporation
(Freddie Mac)
(FHLMC)
Federal National Notes, bonds, AA+ Aaa AAA
Mortgage discount notes, MBS
Association (Fannie
Mae)
(FNMA)
Federal Farm Notes, bonds, AA+ Aaa AAA
Credit discount notes
(FFCB)
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Sample Investment Comparison – Which One is Better
Option #1 #2 #3
Term 3yr 3yr 3yr
Issuer FHLB FHLB FHLB
Par Amount $1,000,000 $1,000,000 $1,000,000
Coupon 1.00% 2.00% 3.00%
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Sample Investment Comparison – Which One is Better
Option #1 #2 #3
Term 3yr 3yr 3yr
Issuer FHLB FHLB FHLB
Par Amount $1,000,000 $1,000,000 $1,000,000
Coupon 1.00% 2.00% 3.00%
Option #1 #2 #3
Term 3yr 3yr 3yr
Issuer FHLB FHLB FHLB
Par Amount $1,000,000 $1,000,000 $1,000,000
Coupon 1.00% 2.00% 3.00%
Price $97.00 $100.00 $103.00
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Sample Investment Comparison – Which One is Better
Option #1 #2 #3
Term 3yr 3yr 3yr
Issuer FHLB FHLB FHLB
Par Amount $1,000,000 $1,000,000 $1,000,000
Coupon 1.00% 2.00% 3.00%
Option #1 #2 #3
Term 3yr 3yr 3yr
Issuer FHLB FHLB FHLB
Par Amount $1,000,000 $1,000,000 $1,000,000
Coupon 1.00% 2.00% 3.00%
Price $97.00 $100.00 $103.00
Option #1 #2 #3
Term 3yr 3yr 3yr
Issuer FHLB FHLB FHLB
Par Amount $1,000,000 $1,000,000 $1,000,000
Coupon 1.00% 2.00% 3.00%
Price $97.00 $100.00 $103.00
Yield 2.00% 2.00% 2.00%
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Sample Investment Comparison – Which One is Better
You can’t just look at the Coupon or the Interest Earned
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Sample Investment Comparison – Which One is Better
You need to look at BOTH Interest Earned (derived from the Coupon)
AND the Price Appreciation/Depreciation.
Decision Needs to Be Based On YIELD, Not Coupon or Price
Yield = Net Interest Earned +/- Price Appreciation/Depreciation
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Callable Government Agency Bonds
Why Would you Buy a Callable Bond?
• More Yield
• More Optionality, more Yield to Customer
• However, You Must Be Willing to Hold to Maturity - The Bond May Not be Called
Who can Call the Bond?
• The Government decides, not you
When Can They Call the Bond
• Depends on the Structure of the Bond
• Typical Call Dates: Quarterly, Semi-Annually, Annually, Continuously, 1-time
Why Would the Government Call the Bond
• If Rates Go lower, Government calls bond so they can re-issue at lower yields
What Price is the Bond Called At?
• Almost always called at a price of par ($100.00)
Step Rate Bonds
• Coupon Rates Increase Periodically
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Agency Bonds – Types of Calls
Technical Terms - Types of Calls
Canary Cannot be called after completing its first-step period
American Continuously callable at any time prior to its maturity
European One-time call
Bermuda Callable on specified dates that typically coincide with coupon dates.
Examples:
Date Issuer/Headline Coupon Maturity Currency Outst Note
8/10 FED HOME LN BANK 0.650 02/26/25 USD 300 3.5-NC3M BERM
8/12 FED HOME LN BANK 0.580 02/25/25 USD 15 3.5-NC6M BERM
8/6 FED HOME LN BANK 0.520 02/26/25 USD 70 3.5-NC1YR BERM
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Callable Government Agencies – New Issues
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Callable Government Agencies – Yields to Call Dates
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Step - Up Agency Bonds
What are Agency Step-up Bonds?
•Step-ups are callable bonds that have coupons that can increase periodically.
•Step-up Bonds are usually issued by US Agencies such as Freddie Mac, Fannie Mae, and
the Federal Home Loan Banks.
•Coupon step-ups occur on specified preset dates. Step-up bonds can have one or more
coupon steps over the bond’s life.
•Step-up call dates are predetermined and may or may not occur on step-up coupon dates.
Some step-ups, called canary bonds, are no longer callable after their step-up date, and thus if
not called become bullet bonds.
Step-Up Bonds compared to a Fixed Rate Callable Bonds have a lower upfront coupon, but a
higher Yield to Maturity if the Bond goes all the way to Maturity and does not get called.
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Callable Government Agencies – Step-Up Bond
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Step - Up Agency Bonds –Coupon Step Dates
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Step - Up Agency Bonds –Blended Yields to Call Dates
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Illinois Public Funds Investment Act – Muni Bonds
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Bond Ratings
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Types of Muni Debt
Stronger
Credit
1. Unlimited Tax General Obligation Bonds (UTGO’s)
• Back by property taxes of the government
• Unlimited tax pledge
2. Limited General Obligation Bonds (LTGO’s)
• Backed by property taxes of the government
• Limited by specific tax revenues
3. Revenue Bonds
• Water and Sewer
• Tolls
• Debt Service Reserve
• One Primary Source Pledged (May Not Be Property Tax)
• Secondary source of repayment typically unlimited pledge in property
tax revenues (double barrel bonds)
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Muni Bond Cumulative Default Rates
*Recent Aggregate Cumulative Default Rates, Average over the Period 2007-2016, General Governments
Rating Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr . 9/10
Aaa 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Aa 0.00% 0.00% 0.00% 0.00% 0.00% 0.01% 0.02% 0.04% 0.04%
A 0.00% 0.01% 0.02% 0.04% 0.07% 0.11% 0.15% 0.20% 0.30+%
*Cumulative Default Rates, Average over 1970-2014- General Obligation
Rating Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr . 9/10
Aaa 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Aa 0.00% 0.00% 0.00% 0.00% 0.00% 0.01% 0.01% 0.01% 0.01%
A 0.00% 0.00% 0.00% 0.01% 0.01% 0.01% 0.01% 0.01% 0.02%
* Moody’s
**Moody’s July 24th 2015
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Municipal Bonds – How are they Issued
PRIMARY / NEW ISSUE MARKET
Negotiated – Relationship Based Driven
• Government entity hires a broker/dealer to issue bonds for them
• Large Issuers/Entities May Use Multiple Brokers for better distribution
• Most lower rated deals are Negotiated – Gives B/D time to market issue to end Customers
Competitive Market – Cost Based Driven
• Bids Must Be Submitted By a Certain Day and Time – Multiple Brokers Bid
• Many Highly Rated Issuers Issue Competitively because name and ratings sell itself
• Issuers go competitively to get the best/lowest Net Interest Cost (NIC)
Any Bonds Not sold, eventually go into the Broker’s Inventory - Sold in the secondary market.
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Municipal Bonds – New Issue
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Municipal Bonds – Sample Description Page
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Illinois Public Funds Investment Act – CP and Corporate Bonds
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Bond Ratings – Long Term Bond Ratings
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021What Are Corporate Bonds?
• Corporate bonds (also called corporates) are debt obligations, or
IOUs, issued by private and public corporations.
• Companies use the funds they raise from selling bonds for a variety
of purposes, from building facilities to purchasing equipment to
expanding their business.
• When you buy a bond, you are lending money to the corporation
that issued it. The corporation promises to return your money on a
specified maturity date.
• Until that time, it also pays you a stated rate of interest, usually
semiannually. The interest payments you receive from corporate
bonds are taxable.
*Investinginbonds.com
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021What is Commercial Paper?
• Commercial Paper is issued at a discount to its par value which is returned at
the scheduled maturity date. Commercial Paper is issued with terms that
range from 1 to 270 days, and are issued to investors with minimum
denominations of $ 100,000. However, unlike Treasury Bills which have the
“full faith and credit backing of the US Government”, CP is an unsecured
promissory note representing an obligation of the issuing company.
Who Issues CP?
• The largest issuers of CP are Financial Issuers which includes Banks and
Finance Companies. Other issuers of CP include corporations with strong
credit which often borrow to fund seasonal inventory and/or working capital
needs.
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Bond Ratings – Short Term / Commercial Paper Ratings
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Bond Ratings – Combined Bond Ratings
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021CP – Trade on a Discount Rate – Just Like T-Bills and DISCOs
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Advantages of Corporate Bond Exposure
• Yield/Spread Advantage vs. Treasuries and Agencies
• Diversification Benefit of adding Corporate Credit exposure
• Larger Market Size vs. Agencies and Taxable Municipal Bonds
• Strong Historical Credit Performance
• More Liquidity Than Commercial Paper
Source: Moody’s Annual Default Study 2-1-19
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021High-Quality Corporate Bond Issuers
Selected Industrial Issuers within 1-3 Yr. Corporate Bond Index
AAA AA+ AA AA- A+ A A-
Johnson & Johnson Apple Walmart Proctor & Gamble UPS General Electric Harley Davidson
Microsoft Exxon Alphabet Shell BMW US Disney Coca-Cola
Pfizer IBM Phillip Morris Cigna
Novartis Costco Cargill Lowes
Chevron Siemens Home Depot Comcast
ADP Unilever Boeing Raytheon
Toyota PepsiCo Du Pont
Selected Financial Issuers within 1-3Yr. Corporate Bond Index
AAA AA+ AA AA- A+ A A-
NY Life Mass Mutual Royal Bank Canada JP Morgan Protective Life Bank of America Goldman Sachs
Chase
USAA US Bank Lloyds Bank Barclays Bank SunTrust
TD Bank ING Bank BB&T Citigroup
Bank of NY American Express Morgan
Stanley
BNP Paribas Wells Fargo Comerica
PNC Bank TIAA
KeyBank
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Corporate Bonds
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Corporate Bonds
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Corporate Bonds
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021What Did We Learn Today
Stronger
Credit
Marketable Securities – Trade on a Spread to Treasuries
1. US Treasuries – T-Bills, Notes and Bonds
2. FDIC Insured CDs
3. Government Agencies – DISCOs, Bullets, Callables (Fixed and Steps)
4. Taxable Muni Bonds – 4 Highest Classifications (AAA-BBB Rated)
5. Corporate Bonds – 3 Highest Classifications (AAA-A Rated)
More
Yield
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Example - Your Options Available To You
Stronger Marketable Securities – Trade on a Spread to Treasuries
Credit
1. 3yr Treasury – 0.40% Yield
2. 3yr FDIC Insured CD – 0.35 – 0.55% – Depending on Name
3. 3yr Non-Callable Government Agency – 0.45% (+5 to Treasuries)
4. 3yr Callable Agency – 3yr 1yr 1x – 0.50% (+10 to Treasuries)
5. 3yr Callable Agency – 3yr 3mo – 0.55% (+15 to Treasuries)
6. 3yr AA Rated Taxable Muni UTGO Bond – 0.60% (+20 to Treasuries)
7. 3yr A Rated Taxable Muni Revenue Bond- 0.70% (+30 to Treasuries)
8. 3yr AA Rated Corporate Bond – 0.65% (+25 to Treasuries)
More
Yield 9. 3yr A Rated Corporate Bond – 0.75% (+35 to Treasuries)
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021What Did We Learn Today
Treasury Bills / Agency Discount Notes (DISCOs) / Commercial Paper
• Less Than 1yr Maturities
• All Trade Using Discount Rate
• Zero Coupon
• Interest Paid At Maturity
Example: $1,000,000 Par Amount – Spend $990,000 – Receive $1,000,000 at Maturity
Government Agencies – FFCB, FHLB, FHLMC, FHLB
• Maturities – 0-30 yrs,What Did We Learn Today
Municipal Bonds – 0-30yrs
• Taxable and Tax-Exempt
• New Issue – Negotiated / Competitive
• Secondary Market – Actively Traded
• Types – UTGOs, LTGOs, Revenue Bonds
• Must Be in 4 Highest Classifications
• Extremely Low Default Rate
• Higher Yield than Government Agencies
Corporate Bonds – 3yr Final
• Commercial Paper – Less 270 Days – Use Short Term Ratings
• 3yr Maximum Final Maturity
• No More than 33% of Overall Investment Exposure in Corporate Bonds
• Single A Rated or Better
• More Yield than Agencies and Typically More Yield Than Taxable Munis
• Strong Historical Credit Performance
• Highly Liquid
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021What Did We Learn Today
Evaluating Bonds
• You Can’t Just Look at Coupon
Higher Coupon Does Not Always = Higher Yield
Lower Coupon Does Not Always = Lower Yield
• Dollar Price Paid also affects Yield
Discounted Price (Under $100) = Yield Higher than Coupon Rate
Par Price ($100) = Coupon Rate and Yield the Same
Premium Price (Over $100) = Yield less than Coupon Rate
• Yield = Coupon Payments +/- Price Appreciation/Depreciation Over Time
• Yield is the Way to Evaluate Different Bonds
• Marketable Securities (In General) – Treasuries, Agencies, Munis, Corporates
• No Collateral Needed – Only CDs over $250,000 Need Collateral
• Can be Purchased in any dollar amount or increment – No Need to worry about
just $250,000
• Agencies, Corporate and Taxable Munis – Trade on a Spread to Treasuries
• More Liquidity – If Bond/Security Needs to Be Sold
• Larger Deal Sizes = More Holders = Better Bids
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Why Do We Do All of This – To Increase Your Bottom Line
$200,000
$180,000
Annualized Earnings $160,000
$140,000
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$0
20mm 40mm 60mm 80mm 100mm
5bp $10,000 $20,000 $30,000 $40,000 $50,000
10bp $20,000 $40,000 $60,000 $80,000 $100,000
15bp $30,000 $60,000 $90,000 $120,000 $150,000
20bp $40,000 $80,000 $120,000 $160,000 $200,000
Portfolio Size
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 202165LASTLY – Let me Finish with a Story
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021What Did We Learn Today - LASTLY
• Not Every Decision is Always Based On Yield - Other Factors May Come into Play
• Diversification
• Risk/Reward
• Relative Value
• Your /Market View on Interest Rates
• Interest Income
• Maturity Dates
• Dollar Amount
• Line Items
• Liquidity
• Muni Bonds – Is it a Local Name
• Customer Service
• Competitiveness
• Trust
• Relationship
• Reputation
• Location
• Ease of Use
• Other Intangibles
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021QUESTIONS? IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021
Disclosures
This information is not intended for use regarding the investment of municipal bond proceeds or municipal escrow investments. (a)
Fifth Third Securities is not recommending an action to you as the municipal entity or obligated person; (b) Fifth Third Securities is
not acting as an advisor to you and does not owe a fiduciary duty pursuant to Section 15B of the Exchange Act to you with respect
to the information and material contained in this communication; (c) Fifth Third Securities is acting for its own interests; and (d)
you should discuss any information and material contained in this communication with any and all internal or external advisors and
experts that you deem appropriate before acting on this information or material
Investments in fixed income products are subject to liquidity (or market) risk, interest rate risk (bonds ordinarily decline in
price when interest rates rise and rise in price when interest rates fall), financial (or credit) risk, inflation (or purchasing power) risk,
and special tax liabilities.
This advertisement is neither an offer to sell nor a solicitation of an offer to buy any of these securities. New-issue
municipal offerings are made only by official statement. The securities shown as available from the syndicate may no longer be
available from the syndicate at the time of pricing.
All bonds are subject to availability and yields are subject to change. Market value will fluctuate. Bond values will decline as
interest rates rise. The bond’s income may be subject to certain state and local taxes depending upon your tax status and or the
federal alternative minimum tax.
Fif th Third Securities is the trade name used by Fif th Third Securities, Inc., member FINRA/SIPC, a wholly owned subsidiary of Fif th
Third Bank, National Association, a registered broker-dealer, and a registered investment advisor registered with the U.S. Securities
and Exchange Commission (SEC). Registration does not imply a certain level of skill or training. Securities and investments of f ered
through Fif th Third Securities, Inc.:
Are Not FDIC Insured Of f er No Bank Guarantee May Lose Value
Are Not Insured By Any Federal Government Agency Are Not A Deposit
IGFOA ANNUAL CONFERENCE • SEPTEMBER 13–14, 2021Disclosures
About Fifth Third Capital Markets
Fifth Third Capital Markets is the marketing name under which Fifth Third Bank, National Association, and/or its subsidiary, Fifth Third Securities, Inc., provide certain
securities and investment banking products and services. Fifth Third Capital Markets offers investment banking++, debt capital markets+, bond capital markets++,
equity capital markets++, financial risk management+, and fixed income sales and trading++. Fifth Third Bank, National Association provides access to investments
and investment services through various subsidiaries, including Fifth Third Securities. Coker Capital is a division of Fifth Third Securities. Fifth Third Securities is the
trade name used by Fifth Third Securities, Inc., member FINRA / SIPC, a registered broker-dealer and registered investment advisor registered with the U.S.
Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training. Securities and investments offered through Fifth Third
Securities, Inc.:
▪ Are Not FDIC Insured
▪ Offer No Bank Guarantee
▪ May Lose Value
▪ Are Not Insured By Any Federal Government Agency
▪ Are Not A Deposit
+ Services and activities offered through Fifth Third Bank, National Association.
++ Services and activities offered through Fifth Third Securities, Inc.
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