Legislative Assembly for the ACT: 1999 Week 3 Hansard (25 March) . . Page.. 934 ..
The CFU uses the Standard & Poor's (S&P) Credit Focus report which is updated and issued monthly by S&P as the basis of confirming the credit ratings of all stock it may invest in. The CFU may not undertake any short term investments (ie less than 365 days) in any stock rated lower than A2 by S&P.
Definitions of the rating categories available to the CFU for investment are:
A1+ Extremely strong capacity to pay (the highest short term rating available)
A1 Strong capacity to pay
A2 Satisfactory capacity to pay
Monetary restrictions which apply to arbitrage related investments are:
Portfolio Limit for Arbitrage Investments
Total of all arbitrage investments are not to exceed $200 million
Group Limits for Arbitrage Investments
Total of all A1+ investments are not to exceed $200 million
Total of all A1 investments are not to exceed $100 million
Total of all A2 investments are not to exceed $50 million
Counterparty Limits for Arbitrage Investments
No more than $50 million can be invested in an individual A1+ stock
No more than $30 million can be invested in an individual A1 stock
No more than $20 million can be invested in an individual A2 stock
An arbitrage transaction will not be undertaken for more than a term of ninety days.
An arbitrage investments credit limit report is updated on a daily basis to ensure that the exposure credit limits are not exceeded. This report is updated daily and must be checked in the first instance by the Manager CFU or alternatively the Assistant Manager CFU prior to authorisation of an arbitrage transaction.
Issuance Credit Limits
The size of the ACT's Commercial Paper Program is currently $500 million. The Program allows the ACT to undertake short term borrowings (maturities limited to 360 days) for the purposes of satisfying funding requirements of the ACT. Generally, the Program is used until such time as a long term fixed rate transaction is arranged if this is thought to be the appropriate strategy.
In this regard, priority is given to ensuring that the facility always has the capacity to be utilised for the purposes of raising new borrowings for the ACT when required.