Nama paves way for State payment with junior bond buyback

The National Asset Management Agency (Nama) has told holders of its remaining €1.06 billion of junior bonds that it will buy back its last outstanding debt notes at the earliest possible date on March 1st.

This will allow the State-owned so-called bad bank to clear a final hurdle before it returns an initial €2 billion of surplus cash to the Government later this year.

“This is the first step towards NAMA transferring the first €2 billion of its €4 billion projected [lifetime] surplus to the Exchequer later this year,” a spokesman for the agency said.

Nama was set up in 2009 to buy €74 billion of festering commercial property loans from the country’s banks at a 57 per cent discount. Some 95 per cent of the consideration was by way of senior bonds, the last of which were redeemed in 2017, with the remaining €1.6 billion made up of junior bonds.

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NAMA, led by chief executive Brendan McDonagh, offered holders of junior bonds – including the banks – the opportunity in 2018 to sell back some of their notes, ahead of the agency’s ability in March 2020 to force a redemption. Some €1.06 billion were outstanding at the end of 2019.

About half of the original junior bonds were held by Anglo Irish Bank and Irish Nationwide Building Society before the lenders merged in 2011 under a new entity called Irish Bank Resolution Corporation (IBRC). However, these were sold to a group of investors in 2014, as part of IBRC's liquidation.

Nama had its planned lifespan extended by the Government last year from 2021 to 2025 in order to allow the so-called bad bank work through its remaining loans and legal cases.

The agency has generated €45.3 billion in 10 years of operations, largely from asset and loan sales as well as rental receipts from properties controlled by debtors and receivers, it said last month. This includes €1.3 billion in 2019.