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City reports $5.7B investment pool, negative swap fair value and premarketed airport bonds
Summary
Finance staff reported a $5.7 billion general investment pool yielding about 4.081%, a net paid of $6 million on swap activity for FY25 and a negative fair value on swaps of roughly $75 million; staff also described a recent premarket bond sale for airport subordinate revenue bonds.
City finance officials told the Budget and Fiscal Affairs Committee on July 29 that the general investment pool held approximately $5.7 billion as of June 30 and produced a quarter-over-quarter yield increase to about 4.081 percent. Deputy Controller Will Jones said Fitch reviewed the pool and assigned it a AAA rating.
The controller's office reported swap activity results for fiscal year 2025: the city had a net paid amount of $6 million related to its swaps for the year, and the fair value of swaps was negative approximately $75 million as of June 30, 2025. Finance staff explained the negative fair value is measured at market and can move with interest-rate changes; they reiterated the numbers will be finalized in the FY25 comprehensive annual financial report.
Staff also briefed the committee on a recent airport bond transaction. The city premarketed and priced approximately $724 million of Airport System Subordinate Lien Revenue Bonds, Series 2025 AB, using call features to preserve future redemption flexibility. Finance staff said the all-in true interest cost for the airport transaction priced last week was about 5.16 percent after investor demand lowered expected borrowing costs.
Why it matters: investment returns and swap positions affect the city's near-term liquidity and debt-service budgeting. The airport bond sale will fund planned airport work and influences long-term debt-service projections.
Finance staff noted the city maintains a policy of keeping no more than 20 percent of a given debt issue in variable-rate structures, consistent with rating-agency guidance. Officials said enterprise credits can temporarily exceed that internal threshold during large capital projects. Detailed security listings and the quarterly investment report appear in the MOFAR (monthly operating financial report) packet submitted to the committee.
