Michael Noonan (Limerick City, Fine Gael)

I am advised by NAMA that it plans to invest substantial funding over its lifetime in preserving and enhancing the assets that secure its loans, including significant investment in assets located in Ireland, and that a substantial portion of its cash reserves will be used for this purpose. In fact, the chairman of NAMA today announced plans to invest €2 billion by 2016. By the end of March 2012, the agency had invested more than €1 billion in the preservation, enhancement and completion of property assets underlying its loan portfolio. More than €500 million of this had been committed to assets in Ireland and this is helping to secure the direct employment of thousands of employees in small and medium trading businesses located throughout the country, in addition to substantial additional direct and indirect construction and property related employment in general building works including re-fit, refurbishment and upgrade of NAMA-controlled properties. NAMA advises me the other significant area in which it will employ its cash reserves is the repayment of the senior bonds which NAMA issued to fund the acquisition of its assets. NAMA has already repaid €1.6 billion of this debt and I am aware the agency is firmly on course to meet the target of reducing NAMA debt by €7.5 billion cumulative by the end of 2013. NAMA will achieve this target from interest and principal receipts from its loan assets and from the proceeds of asset disposals by its debtors. Under the Act, NAMA is required to consult with me on any proposed tranche of debt repayment.

In addition to repaying NAMA's debts and advancing working and development capital to enhance its assets, NAMA will use its cash reserves to meet the agency's ongoing funding requirements and operational expenses. In this context I am advised the NAMA board considers it will not require additional resources from the Exchequer over its lifetime.

Additional information not given on the floor of the House.

In managing its liquidity needs, NAMA must ensure that it has available liquidity over the medium term to meet all of its contractual obligations as they fall due. Such obligations, as outlined, include its day-to-day operating costs, coupon payments due on its bonds and derivative contract payments. It also includes the advances to debtors for working capital and project funding which are often required at short notice. I am advised that updated liquidity projections, based on these various expected inflows and outflows, are reviewed on a monthly basis by the NAMA board.

In terms of cash management at the agency I am advised cash is either on deposit with approved counterparties or the Central Bank or invested in qualifying liquid assets such as short-term Irish Government securities. The Deputy will be aware that €3.06 billion of NAMA's cash reserves was utilised in facilitating a short-term bridging transaction relating to the IBRC promissory note payment due on 31 March 2012. I am advised by NAMA the rate earned on this facility is within the range of returns achieved on NAMA's short-term investments.

The agency has also advised me that cash balances tend to fluctuate for a number of reasons, including the scale of NAMA's business, the fact the timing of loan and property sale transactions is not readily predictable and the time lag between cash receipts from debtors and NAMA senior note redemptions.

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