Investing Bond Proceeds
Preparing for Bond Proceeds Investments in a Rising Interest Rate Environment
With interest rates on the rise, a careful and thoughtful approach to the investment of bond proceeds can make a real difference when seeking to generate competitive returns over the life of the bond issue. Investors should evaluate whether actively managing bond proceeds or a one-time portfolio purchase is the best option to suit their needs. When deciding how to invest bond proceeds, investors must consider the following:
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The time horizon and complexity of a project
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Permitted investments
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Cash flow expectations
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Arbitrage rebate implications
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Flow of funds
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Risk tolerance
PFM Asset Management (PFMAM) helps bond issuers professionally manage their bond proceeds using strategies that are tailored to their individual needs. At PFMAM, we do not believe that “one size fits all.” Instead, our asset management strategies are customized to each client’s permitted investments, cash flows, and other constraints.
Why PFM Asset Management?
We are unaware of any firm with more experience in the specialized field of bond proceeds investment strategies. We have more than two decades of experience managing bond proceeds for public-sector investors, from which we have gained a deep understanding of their investment guidelines and challenges. As of March 31, 2022, our investment professionals managed $132.8 billion in discretionary assets, of which about $12.5 billion include bond funds, construction funds, debt service reserve funds, and debt service funds.
Our investment professionals use sophisticated portfolio optimization software and work closely with our fixed-income trading desk to structure and competitively procure portfolios based on expected cash flow needs as well as current and projected market conditions. Our team is an independent investment advisor that is accountable to clients as a fiduciary and acts in their best interest. We believe this independence benefits our clients in many ways.
Our Philosophy
Our investment philosophy focuses on the tenets of safety, liquidity, and competitive returns when managing fixed-income securities for the public-sector. Additionally, we look at bond proceeds investments from a tax planning standpoint, leveraging the expertise of our dedicated Arbitrage and Tax Compliance Group.
Our Process
After considering the project’s distinct characteristics, we help clients decide whether an active or passive approach would be most likely to generate the highest net return. If active management is deemed appropriate, we utilize a number of strategies to enhance the portfolio.
PFMAM has an outstanding track record, an accomplishment we are proud of given the challenges of the past few years. Since inception, we have not lost any of the principal that clients have entrusted to us; in fact, we have helped our clients avoid the losses suffered by many during the recent COVID pandemic. Working in collaboration with our clients, we are able to structure intelligent strategies that help maximize earnings over the life of a bond issue.
To learn more about investing your bond proceeds, please contact Trish Oppeau directly at 314.619.1792 / oppeaut@pfmam.com or Nick Kenny at 573.234.0814 / kennyn@pfmam.com or Angie Hughes at 816.402.0018 / hughesa@pfmam.com.
PFM Asset Management ("PFMAM") is an investment adviser registered with the U.S. Securities and Exchange Commission and a subsidiary of U.S. Bancorp Asset Management, Inc. ("USBAM"). USBAM is a subsidiary of U.S. Bank National Association ("U.S. Bank"). U.S. Bank is a separate entity and subsidiary of U.S. Bancorp. U.S. Bank is not responsible for and does not guarantee the products, services or performance of PFMAM.
NOT INSURED NO BANK GUARANTEE MAY LOSE VALUE NOT A DEPOSIT