Nama invests €50m in short-term Irish bonds

 

THE NATIONAL Asset Management Agency (Nama) has invested about €50 million in short-term Irish Government bonds from its cash reserves of more than €1 billion, the State agency has said.

Nama purchased the bonds on the secondary market “given the relatively high yields available on short-term Government debt”, said a spokesman for the agency.

The treasury section of the agency “manages its cash holdings in order to maximise returns on this money”, he said.

The Government has a two-year bond with €4.5 billion of debt due to be repaid in November. The yield on the two-year debt was trading at 8.8 per cent in the secondary bond markets yesterday.

One-year debt was trading at 5.8 per cent compared with 1.4 per cent on similar German bonds.

The Government’s debt is managed by the National Treasury Management Agency from Treasury Building in Dublin where Nama is also located. The agency falls under the remit of the NTMA.

The yield on 10-year Irish Government debt has fallen by one percentage point from a high of 10.2 per cent following last week’s Central Bank stress tests.

Nama has generated cash of more than €1 billion from repayments by debtors through forced property sales and refinancing.

Some €250 million has been paid off Nama bonds held by the five participating institutions.

Nama will take an impairment charge in its 2010 accounts given the decline in property prices since the €72.3 billion in loans it has acquired were valued in 2009.

The accounts must be signed off by the Comptroller Auditor General.