The National Asset Management Agency (Nama) said on Wednesday it has redeemed a further €1 billion of senior bonds issued to banks during the financial crisis to pay for their risky commercial property loans.
The transaction means that Nama has now repaid 91 per cent of such debt, or €27.6 billion in total, including €5.5 billion of redemptions this year alone.
Senior bonds comprised 95 per cent of the deeply discounted payment it made to banks during the financial crisis for loans with a face value of more than €70 billion. The remaining 5 per cent is made up of subordinated bonds.
“In 2014 Nama set a target of redeeming 80 per cent of its senior debt by the end of 2016,” said the agency’s chief executive Brendan McDonagh. “That has now been exceeded by €3.6 billion.”
Stephen Lyons, an analyst with Davy in Dublin, said that Nama would likely have repaid all of its senior debt by the end of next year.
“While Nama has its first option of redeeming the junior debt in March 2020, it may offer to buy it back at an earlier stage as this debt currently carries a 5.25 per cent coupon, which could be considered expensive for a semi-State-like company,” said Mr Lyons.
Partners
“Still, a lot depends on what cash they need for their residential development plans and whether they bring on joint venture partners.”
Nama has been tasked with delivering 20,000 houses and apartments by 2020 at a total cost of€5.6 billion under a plan that is aimed at helping the State to deal with a shortage of homes and a mounting homelessness crisis, particularly in Dublin.
The agency is also involved in projects to deliver 3.95 million sq feet of office and other commercial space in the Dublin docklands under a fast-track Strategic Development Zone designation.
Mr McDonagh said Nama remained on course to make a surplus, or lifetime profit, for Irish taxpayers which is currently estimated to be in the order of €2.3 billion.
The agency said last month that it expected to reduce its direct costs by 33 per cent to €72 million as it continued to wind down its activities.
