ALEXANDRIA, Va. NCUA ruled that government guaranteed bonds issued by the U.S. Overseas Private Investment Corp., which helps finance private sector projects overseas, are permissible investments for federal credit unions.
"Federal credit unions are authorized to invest in, among other things, 'obligations, participations, securities, or other instruments of, or fully guaranteed as to principal and interest by any ...agency of the United States ...OPIC is an agency of the United States,” wrote NCUA General counsel Michael McKenna in a legal opinion provided to the World Council of CUs.
As set forth in its enabling statute, OPIC is an agency of the United States. Accordingly, obligations fully guaranteed by OPIC are permissible investments for FCUs, wrote McKenna in his legal opinion.
The OPIC bonds, known as Certificates of Participation, carry a full faith and credit U.S. government guarantee, similar to U.S. Treasury notes but generally with a higher yield. The base interest on each COP, which is dependent on duration (determined by the fund manager), generally is comprised of the U.S. Treasury STRIP yield plus a variable spread as determined on each transaction in the U.S. debt capital markets at the time of COP issuance. The base interest is paid to the COPs investors, not OPIC.
