Business Irish

Friday 23 February 2018

IBRC liquidators may revive bid to sell €843m of junior NAMA bonds

Joe Brennan

IBRC's Special Liquidators could revive efforts to sell €843m of junior NAMA bonds thanks to a rise in prices, according to Merrion Capital.

An earlier effort to sell the bonds was pulled in December after bids fell short of the liquidators' reserve price.

That was before a February decision by NAMA to make a discretionary coupon payment on the so-called "junior" bonds, which has radically increased their tradable worth.

Merrion's Ciaran Callaghan said the decision had a dramatic impact on valuations for the asset – the junior NAMA bonds would now have a market valuation of 70c, compared to the 15c AIB had its share of the assets valued at before the move.

NAMA used €32bn of bonds or IOUs to finance its purchase of loans transferred out of the banks at a discount of 58pc in 2010.

About 95pc of the payment was in senior NAMA bonds, with the rest in the subordinated bonds.

TARGET

The senior bonds must be repaid, but the junior securities only have to be redeemed if the agency beats a target of repaying all of the senior debt by 2020.

The decision to start making payments on the junior bonds is an indication that NAMA does not expect to make a loss over its life.

The so-called junior debt carries a 5.264pc annual coupon or interest rate, according to NAMA's own data.

Irish Independent

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