2.2-4502 - Investment of funds of Commonwealth, political subdivisions, and public bodies in "prime quality" commercial paper.
§ 2.2-4502. Investment of funds of Commonwealth, political subdivisions, andpublic bodies in "prime quality" commercial paper.
A. The Commonwealth, all public officers, municipal corporations, otherpolitical subdivisions and all other public bodies of the Commonwealth mayinvest any and all moneys belonging to them or within their control otherthan sinking funds in "prime quality" commercial paper, with a maturity of270 days or less, of issuing corporations organized under the laws of theUnited States, or of any state thereof including paper issued by banks andbank holding companies. "Prime quality" shall be as rated by at least twoof the following: Moody's Investors Service, Inc., within its NCO/Moody'srating of prime 1, by Standard & Poor's, Inc., within its rating of A-1, byFitch Investor's Services, Inc., within its rating of F-1, by Duff andPhelps, Inc., within its rating of D-1, or by their corporate successors,provided that at the time of any such investment:
1. The issuing corporation, or its guarantor, has a net worth of at leastfifty million dollars; and
2. The net income of the issuing corporation, or its guarantor, has averagedthree million dollars per year for the previous five years; and
3. All existing senior bonded indebtedness of the issuer, or its guarantor,is rated "A" or better or the equivalent rating by at least two of thefollowing: Moody's Investors Service, Inc., Standard & Poor's, Inc., FitchInvestor's Services, Inc., or Duff and Phelps, Inc.
Not more than thirty-five percent of the total funds available for investmentmay be invested in commercial paper, and not more than five percent of thetotal funds available for investment may be invested in commercial paper ofany one issuing corporation.
B. Notwithstanding subsection A, the Commonwealth, municipal corporations,other political subdivisions and public bodies of the Commonwealth may investany and all moneys belonging to them or within their control, except forsinking funds, in commercial paper other than "prime quality" commercialpaper as defined in this section provided that:
1. Prior written approval is obtained from the governing board, committee orother entity that determines investment policy. The Treasury Board shall bethe governing body for the Commonwealth; and
2. A written internal credit review justifying the creditworthiness of theissuing corporation is prepared in advance and made part of the purchase file.
(1973, c. 232, § 2.1-328.1; 1974, c. 295; 1976, c. 665; 1986, c. 170; 1987,c. 73; 1988, c. 834; 1992, c. 769; 2001, c. 844.)