Archive for June 17th, 2010

The genius of NAMA about to be revealed?

With Ireland’s 10-year sovereign bond closing at a 5.58% yield yesterday and trending nicely towards the 6% again, and with rumblings from Spain and elsewhere about difficulty accessing credit, it seems that NAMA may indeed be on the brink of being declared a success, from the point of view of releasing credit in our banks.

We had thought that the banks would hoard the NAMA bonds which are exchangeable for cash equivalent at the ECB and indeed there may be some of that. But as pointed out in today’s Independent, countries and banks around Europe are finding it (or may soon start finding it) difficult to access credit whereas our 5 NAMA banks have converted their shadey property loans to cash equivalent ( albeit at a hefty loss) and have as a result built up a tremendous potential for lending.

So NAMA mightn’t have generated a wall of money in the economy but without NAMA, would the banks be even more constrained as they struggled with generating liquidity on €81bn of property loans or accessing credit on the international markets?

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