Nama flogged thoroughbreds to get to the finish line but the nags are still running
Nama is racing towards the finish line. Yesterday, it paid off another €2.5bn of its debts, leaving it with just €6bn of senior debt left to be paid back to bondholders. It has accelerated the pace at which it is selling off large chunks of assets and now lining up a massive offload of €4.76bn worth of loans in the coming weeks.
The speed at which it is selling assets and paying down its own debts has been a source of controversy. Michael Noonan would argue that it has reduced the potential risk to the State of having such borrowing in a State agency. It owed over €30bn a few years ago, now it is down to just a few billion.
Critics would argue that it has sold too much good stuff, too quickly and that it could have got more money for the State by hanging on.
The agency has also been criticised for not doing more to alleviate the housing crisis, particularly in Dublin. Nama will argue that is has helped deliver 2,000 residential homes in the capital and says it is on the way to helping to deliver 20,000 more by 2020. We will have to wait and see.
We don't know who the next Minister for Finance will be or how long he/she might be in the job, especially if we end up with a minority government.
The more Nama sells quickly, the less will be left to work with if any new minister wants to advocate a change of policy.
However, it is only when you examine Nama's figures closely that you can see just how much work still has to be done in cleaning up the mess of the commercial property crash.
The agency paid €31.8bn to buy €74bn worth of loans back in 2009. It borrowed the money to buy those assets and it has already paid back 81pc of its senior debt.
Despite repaying 81pc of its debts, Nama still had loans that were originally made for €50bn sitting on its balance sheet at the end of September 2015.
Of course many of these are shot to pieces and Nama valued them at about €9.6bn. But for all its sell-offs, it still has a huge amount of mainly bad loans on its books. At the end of September it had 11,232 non-performing loans sitting there, which had an original face value of €46bn.
Incredibly, €29bn of these loans were delinquent by more than 120 days. Nama reckons those loans are worth just €4.8bn. But it also had €2.3bn of loans which were generating no cash or interest payments at all. Nama reckons these are actually worth about €300m.
Between 2013 and 2015 Nama sold off billions of euro worth of assets. But to suggest they were the better assets or low hanging fruit would be an understatement. In September 2013 it had 10,553 non-performing loans. Two years later it had nearly six hundred more (11,232).
Back in September 2013 Nama estimated that it could get back around 27pc of the money that was originally owed on its loans that were delinquent by more than 120 days. Two years later it reckoned loans in that category were worth about 16pc of their original face value.
This highlights the extent to which the better stuff has been flogged off while the worst loans are all still sitting there in their thousands.
When Nama began its top 12 client developers owed €21bn.
The problem with the agency from the start was that it was too big. One option for the agency might have been for it to morph into a giant new private sector property investment fund. But with €74bn of loans, that it estimated were worth around €30bn, the entity would have been too big, cumbersome and too concentrated on the Irish market.
It could have morphed into five or six listed private sector property entities. Nama has dabbled in this a little by taking small stakes in investment funds linked to some of its assets. For example it owns 15pc of the Kennedy Wilson Real Estate Fund VIII. But it is small beer.
From the point of view of getting cash in quickly and reducing the State's potential downside risk, it has done the right thing. Sell off the good stuff quickly and pay down your debt in a hurry.
The shocking thing is that it gives the impression the agency's work is nearly done or that the mess has been all but tidied up. The exchequer's position is greatly improved but the clean-up is only just beginning.
With thousands of loans which originally represented tens of billions of euro still out there, most of it delinquent, Nama will have to flog it off very cheaply. Based on previous experience you would think its new owners would be more international investment funds but they might not want the hassle that will go with cleaning up so many smaller property loans.
For those borrowers, caught in the property collapse, the last seven years have been tortuous. It looks like they have been completely stuck - unable to get out and unable to move on. This might explain why so many of them are not building houses where they are needed. They cannot progress the financing and are still bogged in Nama with delinquent loans.
Either Nama sticks around for another decade or more to work with borrowers through these loans - and who wants that - or it sells them off to whomever.
New owners will decide who they want to work with and who they want to foreclose. Those decisions await hundreds of Nama clients and they could drag on for several more years.
If Nama moves to wrap it up by 2018, what happens to the €1bn it has lent out for development projects? Presumably those loans could be sold on. What will happen to its 20,000 new houses by 2020 plan?
A new finance minister or minister for housing may have very different views about what should happen with the assets left in Nama. He/she might want a change of emphasis given the extent of the housing crisis.
Unfortunately, a lot of the good stuff is gone.