NAMA to repay €500m of bonds this week -> rte.ie/news/2011/0525/nama-business.html
The National Asset Management Agency has said that it will repay €500m of NAMA bonds this week.
NAMA - Agency has now paid back €750m since the start of the year
This follows the first repayment of NAMA bonds in March and it means that the agency has now repaid €750m of debt since the start of the year.
By the time NAMA finishes acquiring loans from the banks, it is expected to have spent about €36 billion.
‘This is further evidence of NAMA doing what it was set up to do - ensuring the repayment of loans by debtors, managing those debtors very carefully and using the proceeds to repay the bonds NAMA issued to fund the whole project,’ commented NAMA chairman Frank Daly.
It said that Finance Minister Michael Noonan has been informed of the decision.
NWL wonders why NAMA is redeeming money it is only paying 1.7% on and whether it could make a better return on deposit:namawinelake.wordpress.com/2011/ … sh-is-1-7/
I can’t help but explore the move for some sinister motive, and here’s my shot. NAMA bonds are used by our banks to raise funding. They do this by redeeming the bonds at the ECB for relatively short periods of time and the ECB provides the banks with cash. The ECB is quite unhappy with its exposure to Irish banks (€82.8bn at last count) and is known to be seeking to reduce that exposure. Today’s announcement happily converges with that position. Another angle is the fact that ratings agencies regard NAMA bonds as part of our national debt. The NTMA, NAMA’s parent organization that looks after the national debt, is very unhappy about this and our government has gone to extraordinary lengths to create a NAMA structure that keeps NAMA bonds off our national debt. And as far as Eurostat, the government and the IMF is concerned, NAMA bonds are not part of our national debt. The ratings agencies take the contrary view that because NAMA bonds are state-guaranteed and are secured against property loans which can’t be readily converted into cash and whose value is uncertain, that NAMA bonds should be regarded as part of our national debt until repaid.
It is curious indeed as NAMA says it is going to fund 5 bn of development over its lifetime; it would surely make sense for it to do this with its cash pile?
I have a theory, one I don’t really like. I recall reading a few days ago that the banks had broken their liquidity limits a number of times, that is, they don’t have enough cash on hand to fund continuing operations. Could it be that the banks really need the cash? Surely it can only be a small amount different to the repo value (the haircut on NAMA bonds is quite low). Or perhaps having that small amount of cash rather than an asset out to repo is much more valuable?
Namawinelake’s observations on the matter here …namawinelake.wordpress.com/2011/ … sh-is-1-7/
EDIT: Having an apostrophe night special …
Didn’t notice you’d posted the link there yogan …
