Asset Management
The Investments Section manages around $16 billion in global
fixed income liquidity portfolios for the IADB and third parties.
The purpose of holding liquidity is twofold: transactional
and precautionary. The Bank maintains adequate resources to
meet anticipated contractual obligations and to ensure uninterrupted
financial operations in the event the Bank were to refrain
from borrowing in response to unattractive market conditions
or other constraints.
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The primary objective of the Bank's liquid assets
management is the maintenance of a conservative exposure to market,
credit and liquidity risk. Within
these constraints, the Bank
maximizes returns on the invested asset portfolio.
As part of its
overall portfolio management strategy, the Bank is authorized
by its Board of Executive Directors to invest its liquid assets
in
obligations of highly rated governments, agencies, commercial
banks, corporates, asset-backed securities, and mortgage-backed
securities.
The Bank is also authorized to use derivatives, including currency
and interest rate swaps, financial futures and options, primarily
for hedging purposes. In order to manage risks associated with
its liquidity management, the Bank limits its exposure by counterparty,
issuer, sector and rating, and closely matches the duration of
its assets and liabilities.
Summary information on the Bank's investments is shown
in Appendices V and
VI to the Financial Statements - Ordinary Capital.
