H. Mid-term Investment
1. Availability of USNH Cash for Mid-term Investment or Internal Borrowing
1.1 The Finance Committee for Investments is responsible for determining that portion of USNH cash available for (a) mid-term (1 to 5 years) external investments and (b) internal loans to USNH institutions. Permitted mid-term investments are detailed below. Permitted internal loans are covered under USNH BOT.IV.C. The amount of cash available for either mid-term investments and/or internal borrowing is limited to the permanent USNH cash; i.e., the cash (not including endowment, OSRP or bond proceeds held by trustee) not utilized for either working capital or needed for emergency. Permanent cash is calculated by subtracting the cash needed for emergency (assumed to approximate one month’s average current fund expenditures and mandatory transfers from the prior audited fiscal year) from the average of the lowest month end USNH investable cash balances for each of the preceding two years. By permitting permanent cash to be invested internally, USNH will be making the best and highest use of its fungible cash by investing in important projects consistent with USNH’s mission, and often earning higher rates of return with lower risk of default. Mid-term investment often allows USNH to earn higher rates of return as well. The USNH Treasurer is responsible for managing the permanent cash by anticipating future internal borrowing needs and balancing mid-term investments with internal loans in a manner that optimizes investment returns and availability of funds for important USNH capital needs. This statement is subject to periodic review and modification by the Finance Committee for Investments.
2. Permitted Mid-Term Investment Instruments
2.1 This statement specifies the instruments allowed for the investment of USNH mid-term cash balances.
2.2 Note: These investments include only those which are also authorized for investment of USNH bond proceeds.
2.3 Permitted investments include any of the following:
2.3.1 U.S. government obligations.
2.3.2 Receipts, certificates, or other similar documents evidencing ownership of future principal or interest payments due on U.S. Government obligations which are held in a custody or trust account by a commercial bank which is insured by the Federal Deposit Insurance Corporation and which has combined capital, surplus and undivided profits of not less than $20,000,000.
2.3.3 Bonds, debentures, notes or other evidence of indebtedness issued by any of the following:
- Federal Home Loan Banks
- Federal Home Loan Mortgage Association, including participation certificates
- Federal National Mortgage Association
- Government National Mortgage Association
- Farmers Home Association
- United States Import/Export Bank
- Federal Financing Bank
- Federal Housing Administration (debentures only)
- General Services Administration
- United States Maritime Administration
- New Communities (debentures only)
- United States Public Housing (bonds and notes)
- United States Department of Housing and Urban Development
- Direct obligations of any agency or instrumentality of the United States (except for Federal Farm Credit System obligations) and obligations on which the timely payment of principal and interest is fully guaranteed by such agency or instrumentality
2.3.4 Interest bearing time or demand deposits, certificates of deposit, or similar banking arrangements with any bank, trust company, national banking association or other savings institution provided that such deposits, certificates and other arrangements are (i) fully insured by the Federal Deposit Insurance Corporation or (ii) in or with a bank, trust company, national banking association or other savings institution which (or the parent or holding company of which) is rated A2 or better by Moody's Investor Service and A or better by Standard & Poor's Corporation.
2.3.5 Commercial paper rated at the highest rating category by Moody's Investor Service and Standard & Poor's Corporation.