Short-term NAMA bonds pose massive re-financing risk
Issued : Thursday 17 September, 2009
Statement by Joan Burton TD
Minister for Social Protection
Irish citizens face a huge burden in financing NAMA over its expected 10 year life following the admission by the Minister for Finance that the NAMA bonds will be issued with only a 6 month maturity at 1.5 per cent.
This means that when NAMA is up and running it will have to go to the markets every 6 months to re-finance at a time when interest rates are likely to rise slowly but surely from their current record lows.
The repeated assertion by the Government that NAMA will cover its costs, or ‘wash its face’, is based on the assumption that the interest rate will stay at 1.5 per cent. As the Minister now admits, this is just the expected rate for the first six months.
The Taoiseach finally acknowledged that a business plan for NAMA will be forthcoming over the next three or four weeks. Producing a business plan AFTER deals were negotiated is how reckless bankers and developers brought the country to a new economic low. Now the Taoiseach says they’ll work on the figures after NAMA is up and running.
For the Taoiseach and his Government to act in the same way by producing a business plan AFTER they have committed the country to a €54bn gamble is astonishing.
Three weeks is too long to wait for this vital information on a gamble that will impact not just on this on generation, but the next.
