Tag: NAMA

The O in IOU Stands for Owe

Just heard on RTE’s The Frontline from Minister Mary Hanafin (seconds before a very angry man got up to shout at Pat Kenny):

First of all, we’re not borrowing to pay NAMA, em to pay the banks. What we’re doing basically is giving a bond or an IOU and we’ll be getting €77 billion worth of assets in return.

By the same logic, we’re not borrowing to fund the budget deficit either. We’re just issuing bonds, or IOUs if you like, to people in international financial markets and we’re getting cash in return. Sort of makes you wonder what all the fuss is about. Still, it’s good to know that the NAMA bonds are buying us €77 billion worth of assets.

FT: NAMA, SPVs and Other Irish Magic

Here‘s an interesting column on NAMA from the FT’s Alphaville.

Risk Sharing and Accounting Issues

Not too long ago, the Green Party announced with great fanfare that they were getting the NAMA plan amended to feature “equal risk sharing” between the government and the banks (though not between the government and bank shareholders as proposed by Patrick Honohan). Even as it was announced, there were strong rumours that this risk sharing element would represent a tiny change to the original plan. This has now been confirmed.

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NAMA SPV Opportunity for Private Investors: Form an Orderly Queue

Via RTE, we find out about the dividends to be paid to the NAMA Master SPV’s private investors

The private investors, along with NAMA, will receive an annual dividend linked to the performance of the Master SPV. According to a briefing note issued to TDs today, this will be capped at the 10-year Irish Government bond yield at the time the dividend is declared.

When the SPV is wound up, the investors will be re-paid their capital only if the Master SPV has the resources. They will receive a further bonus of 10% if the Master SPV makes a profit.

So, if NAMA loses money, the private investors will lose all of their €51 million, while if NAMA makes money, they will receive a maximum of Irish government bond yields plus 10% over ten years.

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Peter Mathews Talk Tonight

I linked a few weeks ago to a video of Peter Mathews discussing NAMA. Peter is a former banker with ICC and currently an independent banking and property consultant (here‘s a link to a full profile). He is giving a public talk tonight at the RDS Concert Hall at 8PM titled “NAMA Will Lose €12 billion: There’s a Sounder Alternative.”  I have spoken with Peter on a number of occasions and have found him to be highly informative on the subject of Irish banking so I recommend attending his talk if you can.