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Government Debt Management Unit

Government Debt Management Unit. Repo & Lending Facility. 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.

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Government Debt Management Unit

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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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