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City of Pleasanton Operating Budget • FY 2023/24 - FY 2024/25C - 24 <br />The City shall utilize the least costly permitted securities available in structuring refunding escrows. <br />The City will examine the viability of an economic versus legal defeasance on a net present value <br />basis. Generally, the City should look to purchase State and Local Obligations (SLGS) from the federal <br />treasury when structuring refunding escrows. The City may review the purchase of Open Market <br />Securities to fund a refunding escrow. In such a case, a certificate from a third-party agent, who is <br />not a broker-dealer, is required stating that the securities were procured through an arms-length, <br />competitive bid process (in the case of open market securities}, that such securities were more <br />cost effective than State and Local Government Obligations (SLGS), and that the price paid for the <br />securities was reasonable within Federal guidelines. Under no circumstances shall an underwriter, <br />agent or financial advisor sell escrow securities to the City from its own account. <br />E. Arbitrage <br />The City shall take all necessary steps to optimize refunding escrows and to avoid negative arbitrage. <br />Any resulting positive arbitrage, on funds other than advance refunding escrows (which are not <br />allowed to generate positive arbitrage earnings), will be rebated as necessary according to Federal <br />guidelines. <br />11. PERFORMANCE STANDARDS <br />The City of Pleasanton strives to maintain ‘investment grade’ standings in the municipal market. Below <br />is an Investment Grade Table of the three (3) major rating agencies. <br />Moody’s Investor’s <br />Service Inc. <br />Standard & Poor’s <br />Corporation <br />Fitch Investors <br />Service, Inc. <br /> <br />Definition <br />Aaa AAA AAA Highest rating assigned. Very strong security. <br />Aa AA AA Very strong security. Only slightly below best rating. <br />A A A Average security but more subject to adverse financial <br />and economic developments. <br />Baa BBB BBB Adequate capacity to secure debt. Adverse <br />developments may affect ability to meet debt service <br />requirements. <br />12. MARKET RELATIONSHIPS <br />The Director of Finance will be responsible for maintaining relationships with investors, credit analysts, <br />and rating agencies. <br />Note: Moody’s uses the designation “1” to indicate greater strength within the “Baa”, “A”, “Aa” categories. Standard & Poor’s and Fitch use <br />“=” and “-“ to indicate relative strength or weakness in the “BBB”, “A”, and “AA” categories.