Current – Texas CLASS Activities and Updates
At Texas CLASS, we are taking the outbreak of COVID-19 (coronavirus) very seriously. Our business continuity plan allows us to continue business operations as normal. As always, our primary focus is safety: safety of our Participants, our Participants’ assets, and our employees. Please know that all of us at Texas CLASS are continuing to evaluate this situation on several fronts and will continue to update you accordingly.
Our Current Activities:
- Successfully utilizing our cloud-based work capabilities with no interruptions to continued, normal business operations and processing
- Emphasizing our attention on our two fundamental objectives: safety and liquidity
- Monitoring the marketplace and providing updates as they become available
- Following CDC guidelines by proactively canceling events and in-person meetings at this time
Our Current Updates:
- On Sunday, March 15, 2020, the Federal Reserve cut the Fed Funds rate by 100 bps to a target range of 0.0% – 0.25%. In its policy statement, the Fed announced, “it expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.” The Fed also increased its pledge of increased quantitative easing measures by increasing its holdings of Treasuries by at least $500 billion and its holdings of agency MBS by at least $200 billion.
- In the face of disrupted financial markets, the Fed is encouraging all banks to utilize the discount window to help alleviate liquidity risk and ensure the smooth flow of credit across the economy while also lowering the rate of emergency lending through the discount window for banks by 125 bps to 0.25%. In relation to this measure, the Fed is encouraging banks to use any excess liquidity and capital for lending purposes and has thus eliminated reserve requirements.
- With investors increasing liquidity, the market is now looking to the Fed to become a buyer in the U.S. commercial paper (CP) market to help enhance liquidity in the coming days. On Tuesday, March 17, the Fed introduced a “funding backstop to facilitate the issuance of term commercial paper.” All U.S.-domiciled issuers holding a rating of A-1/P-1 are permitted to participate with a maximum of $5 billion per issuer. A very similar program was deployed successfully during the Great Recession of 2008. For weekly updates from the Texas CLASS Administrator, please click here.
Why local government investment pools are useful during this time
Professional Investment Management
Our team of portfolio managers are intimately knowledgeable of internal and external developments and events that may impact portfolios. We have guided our clients through similar interest rate environments and want you to know we are open for business, under normal business hours. As always, we are available to you and continue to be your partner in these unusual times.
Our team of professionals are focused on your local government’s needs. Any time you have a question regarding your investments, our team can assist you!
Working together for your local government and community
Please be assured that Texas CLASS and our investment advisor, Public Trust, are diligently safeguarding your assets. We have taken several steps to ensure the safety of your account as well as implementing safety precautions for our business operations and our entire team.
Our experienced portfolio management and credit research teams continue to monitor the marketplace for any changes regarding the Texas CLASS and Texas CLASS Government portfolios. As always, if you or a member of your team should have any questions regarding your investment(s) in Texas CLASS, please feel free to reach out to your Texas CLASS relationship team member. Our team is fully prepared and operating normally should you need assistance.
We understand that your role is vital to your local government’s operations, so we offer our support to help to ensure that your investment program continues to operate as anticipated. Team members are available via phone and video calls in lieu of a physical meeting.
Texas CLASS is committed to keeping you updated as this is an ongoing situation. Our dedicated client service team is here to answer any questions regarding transaction contributions/redemptions. From everyone at Texas CLASS, we hope that you, your family, and your friends remain safe and healthy.