City of Miami Beach Investment Program Assigned 'AAAf/S1' Ratings

NEW YORK (S&P Global Ratings) March 13, 2019--S&P Global Ratings today said it 
assigned its 'AAAf' fund credit quality rating (FCQR) and 'S1' fund volatility 
rating (FVR) on the City of Miami Beach Investment Program. An FCQR of 'AAAf' 
signifies that the credit quality of the City of Miami Beach's investment 
portfolio exposure is extremely strong. The 'S1' FVR signifies that the 
portfolio exhibits low volatility of returns comparable to a portfolio of 
short-duration government securities, typically maturing within one to three 
years and denominated in the base currency of the fund. 

The City of Miami Beach has maintained an investment policy governing the 
investment of the city's internal funds for more than 23 years. The policy 
establishes the framework for the city's investment activities to ensure 
effective management of the city's funds. The primary objectives of the city's 
investment program are safety of capital, liquidity of funds, and return on 

The City of Miami Beach seeks to achieve these objectives by investing in a 
high-quality portfolio structured to match the city's cash flow requirements 
for ongoing operations, while investing operating funds primarily in 
shorter-term securities. The program will invest in a diversified portfolio of 
investment-grade fixed-income securities selected by the investment adviser 
that will include obligations guaranteed by the full faith and credit of the 
U.S., U.S. government agency obligations, corporate obligations, asset-backed 
securities, bank obligations, and other obligations permitted by applicable 
Florida statutes. The fund is expected to be invested in such a manner that 
average duration does not exceed three years.

The City of Miami Beach has appointed Public Trust Advisors LLC, based in 
Denver, as investment manager of the fund. As of March 2019, Public Trust 
Advisors had approximately $32 billion in assets under management. SunTrust 
Bank serves as the banking services provider, and Fiduciary Trust serves as 
the custodian for the city's investment account.

To derive the FCQR, we conducted a detailed quantitative and qualitative 
review of the portfolio and the investment manager. After applying our fund 
credit quality matrix (which reflects the weighted average credit risk of the 
portfolio of investments) to determine the quantitative assessment of the 
portfolio was credit quality of 'AAAf', we considered our analysis of fund 
management, as well as a portfolio risk assessment. We assessed the 
qualitative components of the investment manager, Public Trust Advisors, as 
adequate, and the portfolio risk assessment as neutral, and our final FCQR is 

To assign the FVR, we first assessed the historical volatility and dispersion 
of the Bloomberg Barclays 1-3 Year US Government/Credit Total Return Index, 
which we view as a representative proxy for the city's investment portfolio 
given the City of Miami Beach has not historically calculated monthly returns. 
This preliminary assessment indicated a volatility profile of 'S1'. Next, 
under our portfolio risk assessment, we reviewed the investment policies 
related to duration, credit exposures, liquidity, derivatives, leverage, 
foreign currency, and investment concentration. We viewed all of the portfolio 
risk factors as consistent with the level of volatility displayed in the 
preliminary assessment, resulting in an intermediate FVR of 'S1'. Finally, we 
applied our assessment of the qualitative components to determine no 
adjustment was required and thus the final FVR was 'S1'.

In determining the FCQRs and FVRs, we performed a comparable rating analysis 
with other funds that have similar portfolio strategy and composition. Here, 
we focused on a holistic view of the portfolio's credit quality and 
characteristics relative to its peers. The comparative rating analysis did not 
result in any adjustment to the ratings.

An FCQR, also known as a "bond fund rating," is a forward-looking opinion 
about the overall credit quality of a fixed-income investment fund. FCQRs, 
identified by the 'f' suffix, are assigned to fixed-income funds, actively or 
passively managed, typically exhibiting variable net asset values. The ratings 
reflect the credit risks of the portfolio investments, the level of the fund's 
counterparty risk, and the risk of the fund's management ability and 
willingness to maintain current fund credit quality. Unlike traditional credit 
ratings (e.g., issuer credit ratings), an FCQR does not address a fund's 
ability to meet payment obligations and is not a commentary on yield levels.

An FVR is a forward-looking opinion about a fixed-income investment fund's 
volatility of returns relative to that of a "reference index" denominated in 
the base currency of the fund. A reference index is composed of government 
securities associated with the fund's base currency. FVRs are not globally 
comparable. FVRs reflect our expectation of a fund's future volatility of 
returns to remain consistent with its historical volatility of returns. FVRs 
reflect S&P Global Ratings' view of a fund's sensitivity to interest rate 
risk, credit risk, and liquidity risk, as well as other factors that may 
affect returns such as use of derivatives, use of leverage, exposure to 
foreign currency risk and investment concentration, and fund management. 
Different symbology is used to distinguish FVRs from S&P Global Ratings' 
traditional issue or issuer credit ratings. We do so because FVRs do not 
reflect creditworthiness, but rather our view of a fund's volatility of 

We review pertinent fund information and portfolio reports monthly as part of 
our surveillance process of our fund credit quality and volatility ratings. 
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