Code of Federal Regulations Title 29. Labor § 29.4262.14 Permissible investments of special financial assistance

(1) Adequate capacity to meet financial commitments means that the risk of default by the obligor is low and the full and timely repayment of principal and interest on the security is expected.

(2) Permissible fund vehicles mean exchange traded funds, mutual funds, pooled trusts, or other commingled securities whose investible assets are invested solely in fixed income securities denominated in U.S. dollars, with an average credit quality, weighted by market value, that meets the definition of investment grade.

(3) Investment grade means publicly traded securities for which the issuer has at least adequate capacity to meet the financial commitments under the security for the projected life of the asset or exposure.

(4) Leverage means the right to a return on a capital base that exceeds the investment which was contributed to the entity or instrument achieving a return.

(1) Individual bonds, securities, or other debt securities;  or

(2) Permissible fund vehicles.

(1) Permissible investments, whether held through permissible fund vehicles or directly through a portfolio of individual securities may not be supplemented by derivatives or otherwise leveraged in a way that could increase the interest rate risk or credit risk in the fund vehicle or portfolio beyond the risk in a portfolio of physical securities, meeting the definition of permissible investments in paragraph (a) of this section, equal to the market value of the portfolio;  and

(2) Any notional derivative exposure, other than exposure gained through a permissible fund vehicle, must be supported by liquid assets that are cash or cash equivalents denominated in U.S. dollars.