I know we’re all suffering from NAMA fatigue and I’m not sure I have it in me to write too many more posts on it. Still, I do want to flag that, independent of arguments about the merits of the plan or not, it is extraordinary how little we have been told about how the plan is going to work or about the basis for the estimates released last week. I don’t have time to get into it all but here’s a list of unanswered questions.
1. How were the original LTV estimate of 77%, the figure of €88 billion for asset value at origination, and the figure of €9 billion arrived at in the absence of a detailed loan-by-loan examination?
2. How was the figure of a €47 billion current market value arrived at in the absence of a detailed loan-by-loan examination?
3. How was the figure of a €54 billion long-term economic value (i.e. a fifteen percent premium between current and long-term economic value) arrived at? Is it solely based on the analysis of prime commercial property yields in Section 2 of the supplementary information? If so, why was such a limited (and unrepresentative) amount of information used? Can anyone explain the links between the analysis of commercial property yields presented to us and the fifteen percent gap between current and long-term economic value?
4. Presumably the €54 billion has been arrived at by adding up five figures for the five separate banks. Why can we not be told these five figures? Since the government already owns Anglo, the total figure is of little importance.
5. Can someone definitively explain the formula determining the yield on standard NAMA bonds? Is it the ECB’s main refinancing rate plus a half percent as stated, pretty confidently, by Minister Lenihan? Or does it involve a Euribor rate?
6. If an answer to the previous question is available inside government circles, are they planning to ever explain it to Willie O’Dea?
7. What is the maturity on the main NAMA bonds? Are they six-month bonds to be repeatedly rolled over or are they longer term bonds with interest rate resets? If the latter, what is the maturity?
8. What will be the interest rate on the estimated €2.7 billion in NAMA’s subordinated bonds?
9. What is the maturity for the subordinated bonds and under what terms will the subordinated bonds pay out? The supplementary material (and the general claim that only a ten percent rise in the value of the assets is required for NAMA to break even) suggests that that any losses NAMA makes on an income flow basis (interest paid minus income received from properties owned) will not be factored into the calculation of “whether NAMA broke even.”
10. Does the latter imply that the any future decision in relation to the imposition of a levy will also ignore losses associated with interest payments?
11. Has the government established a position yet on what the post-NAMA capital position of the assisted banks should be? Over what time horizon does the government envisage the banks achieving these positions?
12. Has an explicit decision been taken that the assets acquired by NAMA will have to be managed by the original banks that made the loans? Will there be a role for alternative approaches such getting international property investment funds involved or bundling loans together, securitising and selling them off?
13. Does the government have a strategy for funding the banks after the ECB moves away from unlimited refinancing operations? Might this strategy involve banks selling NAMA bonds?
No doubt some will view the act of asking these questions as disingenuous mischief making. Still, with €54 billion of our money on the line, I feel we’re entitled to know (and note it is our money that’s purchasing the assets and certainly not “Brussels” as Eamon Ryan seems to think.)
Which brings us to the final question: How many of these questions will have been answered by the time the government asks the Dail to vote on this legislation?