Archive for March 30th, 2010

So said Brian Lenihan in the last hour in a press conference making reference to the NAMA press conference earlier today. Why the consideration paid by NAMA is less than the Long Term Economic Value is unclear at this point – presumably if another party has a first charge then that might reduce the consideration paid. This is very important arithmetic and no doubt this point will be considered in the coming days.

Much has been made today of the 47% haircut (46.5% to be precise but given that Anglo is an estimate the point is moot) but is the truth that the haircut is 34% (€10.51bn LEV cf €16bn loanvalue)?


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Our first spreadsheet shows an overview of NAMA’s finances comparing the draft plan produced in October 2009 with what has been announced today. As you can see we have not been updated with the two key assumptions in the NAMA draft plan

(a) the % increase in the market values of the assets required so that NAMA breaks even IN THE EVENT THAT THE LOAN DEFAULT RATE IS 100% – set at 10% total over 10 years in the draft plan

(b) the % of loans that will repay their debts 100% with any additional interest accrued (though perhaps not in line with the schedule agreed to in the original contract) – set at 80% in the draft plan

Nor do we have an update on the Long Term Economic Value. Note the spreadsheet below assumes the haircuts that applied in the first tranche apply in the same percentages to the updated NAMA loan totals.

In respect of the breakdown by financial institution (FI), we have been given these updated numbers showing the gross loans including loan interest being acquired from the FIs together with the actual haircuts on the first tranche of loans. The final haircuts have not been provided but if we were to apply the first-tranche haircuts to the new estimates of gross loans being acquired from the FIs we can get an estimate of the overall haircut.

Finally and although somewhat beyond the remit of this blog we were informed of the recapitalisations required by each of the FIs – the Anglo position is subject to confirmation.

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Today’s NAMA timetable…

Now until 4.30pm, leaks from politicians and journalists (haircut, recapitalisations, Third Force, credit review committee, EU approvals, banks disputing valuations, valuation horror stories) UPDATE: It’s 3.30pm and less than an hour away from the train of announcements and even though there was a Cabinet briefing this morning and NAMA, the NTMA, Regulator and DoF have practically finalised what will be said today, for once it appears that comunication restraint  is being maintained, though the 40% fall in AIB’s share price in the last couple of days does give cause for concern.

Coverage from RTE from 4.25pm on Radio and Online.

4.00pm NAMA publishes a Guide to itself! 4 pages and very little that you won’t already know.

4.00pm press release from NAMA, new estimate of NAMA loans is €81bn cf €77.1bn previously

4.22pm It appears a briefing has been circulated by DoF to all parties and there is an emerging picture of the State’s exposure through recapitalisation being deferred for a month or so to give the banks more time to seek private capital.

4.31pm Eamon Gilmore says the average haircut is 47% citing the DoF briefing – this is the average discount applied to the first tranche, no news yet on any update on an overall haircut over the life of NAMA.

4.35pm news conference with the Regulator – new capital requirements published.

5.00pm Statement to the Dail  Minister of Finance (confirmed by Taoiseach at 4.19pm)

Tune into Primetime on RTE 1 at 9.30pm and Vincent Browne at 11pm on TV3

Check back here for links ….

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