Nama on course to return €1bn surplus

Nama is on course to return a surplus to the State of roughly €1bn after repaying all senior bonds.

The agency, which was originally set up in 2009, paid €30.2bn in senior bonds and €1.6bn of junior bonds to the domestic banks, in return for €71.9bn in development loans.

However, it is well ahead of schedule in terms of paying back debt. By the end of last year, Nama had redeemed €10.5bn of senior bonds. Moreover, it is on course to redeem a further €2.5bn by the end of June and a further €2.5bn before the end of the year which is half of all its outstanding senior debt.

The original timeframe for Nama to wind down its portfolio was 2020. But the pick up in the Irish property market has accelerated the pace of asset sales. The Government is conducting a review of Nama, which is expected to be completed in July and published before the Dáil breaks for summer recess.

Finance Minister Michael Noonan speaking at the launch of the Nama annual report declined to say whether the agency would be wound up sooner than had been originally planned.

Nama and IBRC had created a €43bn contingent liability for the state. “I was bedevilled by rumours in Europe that Nama and IBRC were holding large losses. It is clear now that there are not and Nama will repay all its senior debt and have a surplus.”

Nama chairman Frank Daly declined to say how much the surplus would be. However, the news agency Bloomberg, quoting an unnamed source, said the surplus would be roughly €1bn.

When IBRC was liquidated in February 2013, Nama paid the Central Bank a €12.8bn floating rate note in return for a charge on its assets. However, all of these assets have been sold to private investors for a total sum greater than €12.8bn.

The reduction in contingent liability exposures through IBRC and Nama were instrumental in the recent credit ratings upgrade by Moody’s, said Mr Noonan.

According to its 2013 annual accounts, Nama made a €211m profit for the year following an impairment charge of €914m for the 12-month period. It had cash balances and liquid assets of €4.4bn at the end of last December. From its inception to this month, it had generated €14.1bn worth of asset sales.

Overall, it has extended €2.9bn in credit advances to the end of April of which €1.4bn related to projects in the Republic of Ireland.

Nama chief executive Brendan McDonagh welcomed the recent approval by An Bord Pleanála for the development plans for the docklands area in Dublin. Nama owns 70% of this land and has earmarked €1bn for investment in a mix of housing units and commercial property.

The agency aims to deliver up to 1,600 housing units for local authorities and other state agencies by October of this year.