so : 17% NAMA sold to unknown investors at an unknown price. Hmm….
Originally posted on NAMA Wine Lake:
You’d think buyers would be queuing up around the block of Upper Merrion Street following the decision of the Government to sell the 17% of NAMA currently owned by Irish Life Investment Managers. Well, too late, the stake has already been sold!
Although we all regard NAMA as a government agency, back in 2009 the Government was careful to structure NAMA so that its debts would stay off the national balance sheet. So the Government enticed/strong-armed three “third party independent investors” to take majority ownership of NAMA, the three being Irish Life Investment Managers (part of Irish Life and Permanent), New Ireland Assurance (part of Bank of Ireland) and Allied Irish Banks Investment Managers (part of AIB originally but sold in November 2011 to a South African investment group). Each of these three investors handed over €17m apiece for a 17% stake in NAMA and the Government put in the remaining €49m so that NAMA started out in life with a €100m capital base.
That’s the history lesson concluded. Fast-forward to today and the Government is set to take 100% control of Irish Life so the State will own not just 49% which allows NAMA’s debts to stay off the national balance sheet but 66% which would likely mean NAMA’s debts – mostly its €28bn of bond which this State has guaranteed – would come onto our General Government Debt pushing our debt next year up from 119% to 138%. This is largely academic of course if you believe that NAMA’s assets will be sufficient to pay off the NAMA bonds by 2020. NAMA has recently reported a profit for 2011 of €200m after a loss of €1,100m in 2010 and who knows, maybe it will break even or make a profit but it is a risk and the ratings agencies which examine Ireland’s ability to repay debt, generally regard NAMA’s bonds as part of the national debt with a caveat that they are backed up by assets, but that there is risk to the value of those assets.