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Archive for June 3rd, 2011

NAMA has made it clear that with each property asset under its control, it will pursue one of six options

(1) Develop

(2) Manage

(3) Sell

(4) Demolish

(5) Mothball

(6) Lease

And in what Property Week is calling a UK “first”, NAMA is reportedly contracting Manse, a company which deals with distressed property and planning issues,  and developer/businessman Chris Musgrave, both to deal with a NAMAed property, the Allens West Logistics Centre in Tees Valley, north east England. The property was owned by developer, John Gallagher and was secured on a loan from Anglo. Begbies Traynor was appointed as administrator last August 2010.

Apparently the aim is to continue to generate rental income from the site which has some 500,000 sq ft of industrial space, of which quite a bit is presently vacant and to enhance the planning permissions for the site and then sell it. The site apparently already has consent for 500 homes and 200,000 sq ft of industrial but has section 106 restrictions (often the requirement for developers to contribute to local schemes).

So in essence, the site has been taken from John Gallagher and control given to Manse and Chris Musgrave, to manage and enhance.

NAMA has not commented on the report or the arrangements with Manse or Chris Musgrave.

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By the time this entry is completed, no doubt the IMF, European Commission and ECB review mission teams on the ground in Athens will have completed their work and issued a statement, but for now at least their work continues with much speculation that they will have finished today.

Temperatures are rising in  Athens, with 32 degrees expected on Sunday, and tempers are also heating up with the occupation of the finance ministry by protesting unionists. Reports have emerged of violence earlier in the week in Corfu when visiting national and EU politicians were pelted with stones. In Athens today, the missile of choice is reportedly yoghurt. Demonstrations are expected again this evening in Syntegma Square opposite the parliament building.

As for the target of the protests, there is little new to report. The Greek prime minister is reportedly now inLuxembourgwith head of the EuroZone finance ministers, Jean-Claude Juncker discussing a possible agreement on new austerity measures and a privatisation programme.

The mouthy members of the ECB executive board and governing council are keeping their traps shut as some endgame edges into prospect. The betting is that some voluntary initiative will be pursued to get private bondholders to exchange maturing debt for new debt with better terms.

A former director of the IMF with the unfortunate name, Claudio Loser has spoken out in favour of a Greek restructuring. The IMF itself seems to have maintained most discipline in these talks and kept its own counsel. Somehow it might emerge from this process with a far better reputation that the squabbling Europeans.

And as this is concluded, it seems the Greek finance ministry has circulated an emailed statement in which it has said that discussions between Greece and the IMF, EC and ECB have concluded “positively” though it will be some days before detail emerges. A conclusion on the Greek crisis is still expected over the coming days and this GreekWatch feature is scheduled to end on Monday next.

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Last Friday, a week ago, Anglo Irish Bank paid €200m to unsecured unguaranteed senior bondholders (XS0366099231, issued 27th May, 2008), redeeming their bonds at par, that is, without imposing any haircut. These bonds had been trading at 87c in the euro last December, 2010 according to the Irish Independent which would mean that an investor who bought those bonds then would see a return of 13c on a 87c investment in six months, which equates to an annual return of 29.9%.

Anglo is in receipt of €29.3bn of public funds. Anglo sold all its deposits to AIB in February 2011. The bank continues to claim on its website that “the Bank continues to provide business lending, treasury and private banking services to our range of customers across all our locations. Anglo Irish Bank remains committed to delivering a quality service to all of its customers” In truth new lending is understood to be minimal and is mostly aimed at maximizing the recoverability of existing loans. Branches are being closed and the latest is that Anglo will be merged with that other certified zombie, Irish Nationwide Building Society by the end of this year. The merged entity will manage the run-off of legacy non-NAMA loans. “Run-off” means getting the best deal on these loans, either by getting some repayment or selling the loans to others or negotiating a settlement with the borrower including debt forgiveness and potentially advancing new money to maximise the value of a lender’s assets.

Although the IMF advocated a haircut for bondholders last November 2010, and naturally it was the position of the Irish government and reputedly the Central Bank of Ireland, that private sector bondholders would share in the cost of the bailout, these views were over-ridden by the EU and particularly the ECB and also, reportedly, by the US Treasury Secretary, Timothy Geithner.

The Central Bank of Ireland published in March 2011 on a “once-off” basis the bondholdings in the six state-guaranteed financial institutions. This is its (corrected) summary.

A common question asked is when these bonds actually mature. The question is sometimes predicated on the notion that Irelandmight change its stance so it is important to know when the bonds fall due. Here is the precise bondholder position in each of the six state-guaranteed (or as the Central Bank of Irelandwould call them “covered institutions”). The information is firstly sorted by bank, then by maturity date. It should be said that this list remains a work in progress and there seems to be some discrepancy in some instances between the totals here and the totals published by the Central Bank.

In summary, there’s some €9bn of difference between the figures produced by the CBI in March 2011 and this present analysis. Work is continuing to identify the discrepancy and it’s too soon to claim another “Der Spiegel” moment. In terms of the analysis on here, some €7bn of the €73bn falls due in 2011, €20bn in 2012, €17bn in 2013 and €29bn in 2014 onwards. It should be said that a small number of bonds don’t have identifiable maturity dates and these have been grouped in the 2014- category. Here’s the summary with the CBI figures on the left and the NAMAwinelake analysis on the right.

And here’s the detail

Allied Irish Banks (AIB)

Anglo Irish Bank (Anglo)

Bank of Ireland

Educational Building Society (EBS)

Irish Life and Permanent

Irish Nationwide Building Society (INBS)

Notes:

(1) Some bonds are denominated in foreign currencies. The exchange rates and the meanings of the three character short form foreign currency can be found here at yahoo finance. So type in “MXN” on yahoo finance and that will display “Mexican Peso”. The following exchange rates were used.

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