NAMA announces Senior Bond redemptions totalling €700m

Announcement of Senior Bond redemptions totalling €700m

€500m of original Senior Bonds and €200m of Senior Bonds issued to Central Bank

The National Asset Management Agency (NAMA) has announced that it has redeemed €500m in Senior Bonds which were issued as consideration for the original loans acquired from the participating institutions in 2010 and 2011.This redemption means that NAMA has now met its first major milestone – the redemption of €7.5 billion of Senior Bonds by the end of 2013.

For this loan portfolio, NAMA issued a total of €30.2 billion in Senior Bonds and today’s redemption leaves €22.7 billion outstanding. The NAMA Board has set a target of redeeming another €7.5 billion in Senior Bonds by the end of 2016 and its expectation is that all senior debt will be redeemed by 2020.

NAMA also announced the redemption of €200m in Senior Bonds which were issued asconsiderationfor the purchase of the IBRC floating charge from the Central Bank following the appointment of Special Liquidators to IBRC in February 2013. Taking into account the redemption of another €300m of the bonds in October, this brings NAMA’s cumulative redemption of these bonds to €500m.

In total, NAMA issued €12.9 billion in Senior Bonds to the Central Bank as consideration for the floating charge and the two redemptions to date mean that the bonds in issue have been reduced to €12.4 billion. The Special Liquidators to IBRC are currently engaged in the sale of various IBRC loan portfolios and the loans which are not sold during this process will be acquired by NAMA over the coming months. 

 NAMA chairman, Mr. Frank Daly, said:

“Three years ago, the Board decided that it would aim to reduce NAMA’s debt by 25% by the end of 2013. We are very pleased that this first crucial milestone has now been met, despite the difficult market conditions that have prevailed in Ireland during the intervening period. The milestone attained today is an important one, not only for NAMA in terms of its own progress, but also because it reinforces the very positive international perception of Ireland as a country that is resolutely addressing its difficulties and meeting its targets.

 The cumulative redemption of €500m in the Senior Bonds issued to the Central Bank (including the redemption of €200m today), also represents good progress in reducing the debt outstanding against the IBRC floating charge that we acquired from the Bank earlier in the year. The outcome of the current sales process undertaken by the Special Liquidators will dictate how much of the IBRC portfolio we ultimately acquire. After we have had an opportunity to assess the collateral supporting the loans that we do acquire, we will be in a position to determine a repayment schedule for the Senior Bonds still outstanding to the Bank at that stage.”

 The Chief Executive of NAMA, Mr. Brendan McDonagh, said:  

“I am very proud of what has been achieved through the hard work and determination of NAMA staff and of the Board over the past four years. Today’s milestone marks an important step on the way towards reducing the taxpayer’s contingent liability which initially stood at over €30 billion.

 We now look forward to the next major challenge which is to redeem another €7.5 billion by 2016, thereby targeting the redemption of 50% of our senior debt by that stage. NAMA will continue to pursue its commercial mandate of generating the best achievable return for the taxpayer and intends to make a significant contribution to the resurgence of the Irish economy over the coming years.”

NOTES:

  • NAMA paid consideration of €31.8 billion to the participating institutions when it acquired their loans in 2010 and 2011.
  • 95% of the consideration (€30.2 billion) was in the form of Senior Bonds guaranteed by the Minister for Finance and the residual 5% (€1.6 billion) was in the form of subordinated debt.