City claims no risky investments

By Roje Adaimy

The City of Sydney Council says its $460 million investment portfolio has not been hit with heavy losses as a result of the United States’ subprime mortgage market crisis.
An independent inquiry into New South Wales’ council investments released last week revealed that some councils had invested up to 50 per cent of their money in risky funds and faced losses of up to $200 million.
But according to a spokesperson, the City of Sydney’s Collateralised Debt Obligation (CDO) investments are held across a variety of funds and do not face any serious risk.
‘The City’s CDO investments are based on corporate credit and does not include any direct investments in the US sub prime market,” the spokesperson said.
A total of $10.66 million has been invested in AAA-, AA- and A-rated CDOs, representing 2.3 per cent of the City’s total investment portfolio.
‘While there has been a general decrease in the paper value of these investments, the underlying fundamentals and credit quality of these securities remain sound and the City’s strategy is to hold these investments until maturity which is between two and six years away,” according the the spokesperson.
A summary of Council’s investments presented at the last Committee meeting showed a positive growth in February this year, despite the continued volatility in global credit and equity markets. The City’s monthly net return performed more than a full percentage-point above the standard UBSA Bank Bill Index.
The City says it will review the independent Cole Report and its recommendations commissioned by the State Government in coming weeks.