NAMA Math - 20% vs. 30%

gnxx

Am I really stupid here with these figures?

The reported discount is 30%.

However, the €77,000,000,000 figure includes €9,000,000,000 in unpaid interest. This suggests that the actual value of loans was/is €68,000,000

Paying €54,000,000,000 on assets of €68,000,000,000 indicates a "discount" of about 20% -- not 30%.

Am I wrong here?

leincar

I heard that as well on Matt Cooper today. I think he was interviewing Morgan Kelly who mentioned these figures.

If its true a bad deal and situation just got worse.

leincar

gnxx wrote: »

Am I really stupid here with these figures?

The reported discount is 30%.

However, the €77,000,000,000 figure includes €9,000,000,000 in unpaid interest. This suggests that the actual value of loans was/is €68,000,000

Paying €54,000,000,000 on assets of €68,000,000,000 indicates a "discount" of about 20% -- not 30%.

Am I wrong here?

Your figures have just been confirmed by Economy correspondent Robert Short on the RTE 9.00 news.

cavedave

While on about nama math how big a pile of 20 euro notes do you reckon it 54 billion is? I did a sum here. Basically it covers Croke Park pitch 2000 notes deep.

leincar

Just how much is €54 billion?

After today it is easy to quantify.

Take the value of your house and add.............€54 billion.

To say its a discount is a lie. When FF use "discount" its a buzzword to cover up a lie

Liam Byrne

cavedave wrote: »

While on about nama math how big a pile of 20 euro notes do you reckon it 54 billion is? I did a sum here. Basically it covers Croke Park pitch 2000 notes deep.

Ah but it doesn't require €20 notes.....it's measured in Liam Lawlor and Bertie Ahern Brown Envelopes.....:mad:

ifconfig

It does seem that the 77bn figure included the 9bn rolled up interest figure.
So the haircut as would normally be represented as "discount" on the original book value of the loan is more like 20% than 30%.
Also - something else which obfuscates how severe (or not) the haircut on the purchasing of the loans will be is the fact that Anglo are in that average percentage figure which may distort the true level of the discount as it applies between purchaser and seller i.e state and privately owned institutions.
The individual breakdowns of the haircuts as they apply to each of the 5 institutions was not given in todays statement AFAIK and , if Anglo were to have been given a proportionally higher haircut then the public purse has taken on a higher valuation risk than would be implied by either the 30% figure or the 20% (rounded down to reflect the rolled up interest).

This is being discussed at the IrishEconomy.ie blog at the moment.

PirateShampoo

There also saying that he plans on paying 7bn over the current market price. And that the banks in question will be left to over see the loans them selves.

blinding

Some politicians and bankers have to be punished for this shambles.

ifconfig

Also - isn't there 5bn Euro set aside for NAMA to engage developers to complete projects. Isn't that part of the funding cost for NAMA - at least
doesn't it magnify the credit risk the taxpayer is being drawn into ?

I have heard that it was originally meant to be 10bn but maybe the Greens managed to reduce it.
I am not really clear on the accounting here.

I credit Joan Burton at least for demanding that Brian Lenihan publish a business plan for the funding costs of NAMA.
The whole detail of the NAMA bonds maturity/coupons was completely glossed over in todays presentation.

SkepticOne

ifconfig wrote: »

Also - isn't there 5bn Euro set aside for NAMA to engage developers to complete projects. Isn't that part of the funding cost for NAMA - at least
doesn't it magnify the credit risk the taxpayer is being drawn into ?

I have heard that it was originally meant to be 10bn but maybe the Greens managed to reduce it.
I am not really clear on the accounting here.

It has been pointed out that this reduction does not mean anything as the minister can authorise payments above this amount to any maximum.

ifconfig

SkepticOne wrote: »

It has been pointed out that this reduction does not mean anything as the minister can authorise payments above this amount to any maximum.

Point taken.
Is it correct, though that this 5bn +- whatever the minister decides needs further adds to the burden of risk/debt being incurred by the taxpayer. Obviously the developers engaged in the completions are obligated to repay the loans given to them to finish out the projects.

gnxx

So it appears that the loan value was €68,000,000,000. I would consider that 50% of this figure is a good guess for a current value ( if potential buyers existed ).

So for €34,000,000,000 of assets the minister is paying €54,000,000,000. This seems like a premium of over 50% on the current value.

I've had some strange haircuts before; but never one that left my hair 50% longer !!

ifconfig

gnxx wrote: »

I've had some strange haircuts before; but never one that left my hair 50% longer !!

Perhaps NAMA should patent this as a hairloss cure , like Rogaine, etc
http://en.wikipedia.org/wiki/Minoxidil

We can recoup some of the costs of NAMA via patent royalties.
Oops - the commission on taxation recommended last week that patent royalties were no longer to be considered tax deductible.:(

dresden8

gnxx wrote: »

Am I really stupid here with these figures?

The reported discount is 30%.

However, the €77,000,000,000 figure includes €9,000,000,000 in unpaid interest. This suggests that the actual value of loans was/is €68,000,000

Paying €54,000,000,000 on assets of €68,000,000,000 indicates a "discount" of about 20% -- not 30%.

Am I wrong here?

Lenihan is either a liar or a fool.

I'd say he takes after the father. It's genetic don't you know.

Senna

Discount!!! buy that shower of corrupt ba*tards a dictionary and tell me how they can use the term "discount" when paying more for the loans than the price of the asset attached.

Do they have such low regard for the public that the figures dont even need to be right.

SkepticOne

ifconfig wrote: »

Point taken.
Is it correct, though that this 5bn +- whatever the minister decides needs further adds to the burden of risk/debt being incurred by the taxpayer. Obviously the developers engaged in the completions are obligated to repay the loans given to them to finish out the projects.

My view for what it is worth is that many if not most developers are similar to Liam Carrol's Zoe group, companies that should not really exist in normal circumstances but are extended credit not because the bank sees any future in them but because a collapse in them would bring down the house of cards.* If you were the director of such a company, you may as well borrow as much as possible since it is as easy for you to fail to pay back five or ten billion as it is to fail to pay back one billion. It is all the same and you keep your staff and subcontractors employed. It is real money from the tax payer going to your friends.

blinding

If the public pay for this then Fianna Fáil must pay by the once and for all anihilation of that institutionally corrupt party.

turly

That's a 30% "discount"? *ROFL*

Bring in the IMF. The more I think about it, the more sense it makes...