News | New Mexico State Treasurer's Office

SANTA FE – Recent news headlines of downgrades and defaults in the local government investment pools of other states have generated a number of inquiries to the State Treasurer’s Office from local and national media and local governments about the safety of the investments held in New Mexico’s local government investment pool. The State Treasurer assures participants that New Mexico’s local government investment pool, known as the New MexiGROW LGIP, is not invested in the types of securities causing the defaults and losses experienced by some publicly-managed funds.

The New MexiGROW LGIP portfolio does not include sub-prime investments or mortgage securities, structured investment vehicles, collateralized debt obligations, or collateralized loan obligations, which are the investments affecting other local government investment pools. As of December 2007, the New MexiGROW LGIP portfolio consisted of AAA rated Prime Institutional Money Market funds (79 percent); U.S. Agency discount notes (11.5 percent); commercial paper (9.5 percent), rated the highest credit quality by the three rating agencies S&P, Moody’s and Fitch; and a fraction of a percent in an interest-bearing bank account. On December 31, 2007, the weighted average maturity of the portfolio, a determinant of interest rate risk, was 10 days and the yield of the pool was 4.83 percent.

The New MexiGROW LGIP is a short-term investment fund established by New Mexico statute that consists of deposits from local governmental entities, tribal governments, school districts, and special districts. The program offers participants a voluntary investment option that safely generates higher returns, using the purchasing power of a large pooled fund. The New MexiGROW LGIP is rated ‘AAAm’ by Standard & Poor’s (S&P), which means the fund has a strong capacity to maintain principal stability and to limit exposure to principal losses due to credit, market or liquidity risks.
# # #