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Government Debt Management: Repo and Lending Facility Guidelines

The Government Debt Management Unit oversees a lending facility for government bonds against cash deposits. Each Primary Dealer (PD) may lend bonds within a limit of 500 million ILS per pre-signed ISMA agreement. The facility operates daily, facilitating transactions with liquid government bonds over 1.25 years to maturity. Collateral requirements include sufficient cash deposits to the Ministry of Finance (MOF) account. The TACH will manage account transactions, while daily interest accrues on collateral and bond transactions, ensuring structured and efficient loan processes.

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Government Debt Management: Repo and Lending Facility Guidelines

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  1. Government Debt Management Unit Repo & Lending Facility

  2. GENERAL POINTS • Target – Lending government bonds against cash deposit. • Every PD is entitled to lend bonds subject to a pre-signed ISMA agreement. • Max amount to each party will not exceed 500 million ILS. • TACH will operate the system. • PD will authorize TACH to credit and debit his account.

  3. Eligible Bonds • Liquid government bonds traded on the MTS-Israel system. • More than 1.25 years to maturity.

  4. Repo Period • Daily renewable basis with an unlimited period. • A repo agreement shall automatically expire when a bond reaches only 1 year to maturity.

  5. Collaterals • No lending without enough collaterals. • Cash only, deposited to a special account of MOF with the BoI. • An extra margin might be required. • TACH will debit PD account and credit MOF account. • M.O.F will pay daily interest on the collaterals (BoI rate minus margin). • MTM will be applied on a daily basis upon changes in the price of the bonds. • Excess amount – TACH will debit MOF account and credit PD’s account upon request.

  6. Repo Transaction • PD will address TACH. • The TACH will approve request subject to collateral deposit. • The nostro account of a TACH member will be credited with the bonds he borrowed and debited with cash (collaterals). • A non clearing house member transactions will be cleared in a special designated sub-account of TACH member. • Interest will be credited on a daily basis. • End of a repo transaction upon PD request and/or a bond with 1 year to maturity.

  7. Interest Payment of the Bond • The PD will pay the interest to TACH on each borrowed bond in his account on the COM date. • TACH will automatically debit PD account on a gross basis. • The interest will be held in the collateral account from the EX date and paid on payment date.

  8. Fees and Commissions • TACH commissions: • A fixed monthly fee. • A clearing fee on a transactional basis.

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