Collateralised Debt Obligation (CDO) Investments

In 2007, the City, on the advice of Grange Securities (later Lehman Brothers) invested $21.2m in CDO products.

The Council policy of the day had the Policy Objective to “provide guidelines with respect to the investment of surplus funds which ensure that the returns on funds invested are maximised within levels of risk that are commensurate with the need for security of public monies”.

The original funds invested in the CDO’s were Reserve funds and therefore there was no direct impact on rates. Any recovery of investment losses restored the balances of those Reserves and the City has never sought to cover the losses by increasing rates.

As at December 2018, the sum total received back so far is $22.83m

Further distributions and dividends from liquidators have yet to be finalised.  These actions deal with the various CDOs as a pool of funds and as such the final returns on individual investments that are the subject of these actions will not be disclosed by the liquidators.

Detailed information is available here.

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