Friday 15 December 2017

Finance: Nama pays junior debt coupon for second year

State-controlled bank, Nama.
State-controlled bank, Nama.

THE state-controlled bad bank Nama is to pay a coupon on its junior debt for the second year in a row.

Nama has complete discretion over whether or not to pay the coupon, or interest, on the subordinated bonds that are held by Irish banks.

This year's interest on the €1.6bn of outstanding subordinated bonds amounts to €84m.

As the biggest holder of the debt AIB will receive the largest share of the payment which will be made on March 1.

Payment this year "reflects the improved outlook for repaying Nama's senior debt and subordinated debt and deliver a surplus for the taxpayer," Nama said in a statement.

Nama used bonds to finance its acquisition of property loans from the banks when it was set up initially.

The bulk of that debt is in the form of senior bonds, which must be repaid by the agency with any potnetial shortfall picked up by taxpayers. The smaller stock of subordinated debt only has to be repaid if there is enough money left over from Nama sales after the other debts have been met.

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