NAMA to repay half a billion euro of NAMA bonds
25 May 2011 – The Board of the National Asset Management Agency (NAMA) has announced that the Agency will repay €500m of NAMA Bonds (Senior Securities) this week. This follows the first repayment of NAMA Bonds which was made in March of this year (€250m) and means that NAMA has now repaid some €750m of debt since the start of the year. The Minister for Finance, Michael Noonan TD, has been advised of this decision. NAMA also repaid €299m of advances made by the Minister for Finance (repayments made in October 2010 and end February 2011). In total, therefore, NAMA has reduced its indebtedness by €1.049 billion in just over one year.
Speaking on the decision, Frank Daly, Chairman of NAMA said that this second repayment of NAMA bonds was significant: “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. NAMA has made very good progress in 14 months since EU approval.”
NAMA issued some €30.5 billion in NAMA Bonds to finance the acquisition of loans with a nominal value of some €72.3 billion from the five Participating Institutions (banks). This represented a discount of 58% on the face value of the loans held by the banks. The banks could then use the NAMA bonds as collateral in order to raise cash from the ECB. In repaying the bonds NAMA effectively pays down its ultimate debt to the banks for the acquisition of their loans. Ultimately NAMA intends to buy back all outstanding NAMA bonds over the lifetime of the project and any remaining cash held by NAMA will represent its profit after other expenses are taken care of.