NAMA planning optional debt payout on improved outlook - report

Monday 24 February 2014 12.21
Junior debt payment would 'represent a major development in the history of the Irish property agency'
Junior debt payment would 'represent a major development in the history of the Irish property agency'

The National Asset Management plans to make a first optional interest payment on its riskiest securities as the outlook for its commercial property assets improves.

This is according to a person with knowledge of the matter.

The Bloomberg financial news agency reports that NAMA will pay the discretionary coupon on the €1.6 billion of junior securities used as part payment to the banks for toxic property loans in 2010 next month. 

The agency’s 2013 profit will beat the €228m posted in 2012, the source added.

The junior debt payment "represents a major development in the history of the Irish property agency, illustrating its
improved financial position and the confidence management has in its outlook," commented Ciaran Callaghan, an analyst with Merrion Capital.

Bloomberg said that NAMA bought €74 billion of loans from five lenders at a discount of 58% in 2010. About 95% of the payment was in senior NAMA bonds, with the rest in subordinated bonds. 

The junior securities will only be redeemed if the agency beats its target of repaying all its senior debt by 2020. NAMA has already repaid a quarter of its €30 billion of senior debt.
  
The interest payment on its junior debt suggests NAMA considers it may now beat its target of breaking even at senior debt level, Mr Callaghan said. 

AIB stands to be the biggest beneficiary of the payment, as it may be able to revalue its subordinated NAMA bonds, which were set at 10 cents in the euro in June, the source said. 

Irish commercial property values rose 0.3% in the third quarter, the first increase in six years, according to
Investment Property Databank Ltd. 

Home prices also rose for the first time in six years in 2013, although are still 47% below their 2007 peak, according to Central Statistics Office figures.

"Overall this is another very positive development for the Irish recovery story, underscoring NAMA’s improving balance sheet and reduction in residual contingent liabilities for the State", Mr Callaghan said.