Best BTPs to Buy Today: What to Buy in 2023?

BTPs, i Multi-year Treasury billsI am among the titles bonds preferred by small savers, and the backbone of the bulk of Italian household portfolios. For decades they have supported postal products in almost completely dividing the Italian savings market, and today I will talk about them in my guide, also identifying those which are the best BTPs to buy today.

Let’s see together how to choose the best BTPs currently available on the market, to integrate a portfolio that needs to be maintained on low risk profiles, with perhaps low but regular returns.

Guide to choosing the best BTPs for 2023

How to choose a BTP? Would it be better to buy it at the time of issue or later?

In reality there is no answer other than the least welcome one: it depends. It is true that the BTP is an instrument with relatively little volatility, but conditions can be created in which it may be convenient to buy on the secondary market.

However to do that you must have experience and knowledge of financial markets. Failure to do so runs the risk of losing money due to our inability to understand our operations.

In other cases, on the other hand, it may be convenient to buy at the time of subscription if the proposed conditions should be interesting compared to what the market is at that stage.

In short, there is no single answer: the BTP that you may be evaluating must be compared with the bond market in general and with what that market offers in the phase in which you are thinking of making the purchase.

Let’s delve into the discussion.

Short-term BTPs

Let’s start with short deadlines on which, as we will see in the following lines, it is very difficult to obtain interesting returns. By short term we mean a duration of between 3 and 5 years. Below that duration there is nothing or almost nothing due to the dynamics that I explained to you in the previous paragraph.

For example, let’s take these two BTPs:

1. Btp Tf 3,75% St24 Eu – ISIN IT0005001547 – 3.75% annual coupon with six-monthly frequency, with ongoing coupon of 1.88%. The gross annual yield is 2.59%. The deadline is set for September 2024;
2. Btp Tf 2,45% Ot23 Eur – ISIN IT0005344335 – the coupon frequency is every six months, and the gross annual yield is equal to 2.45%. The deadline is set for October 1, 2023.

Medium-term BTPs

Here we are with the medium term and let’s start with the first BTPs that are beginning to have a positive return for us.

1. BTP Tf 0,90% Ap31 Eur – IT0005422891 – this is currently a good security, which pays a coupon of 0.90% and matures on April 1, 2031. The effective yield at maturity is 3.76%
2. BTP-15LG26 – IT0005370306 – as I write to you, it has a zero yield with a gross coupon of 2.1%;
3. BTP-01GN27 – IT0005240830 – to have an initial yield of 0.1% we have to arrive in June 2027 with this BTP which was initially issued with a gross coupon of 2.2%;
4. BTP-01AG29 – IT0005365165 – I would like to point out this BTP which, held for 9 years at the current price, would have a net yield for you of 0.29% against a gross coupon of 3% in principle.

long-term BTPs

On long maturities we find some higher coupons even if the latest issues have seen rates continue to fall.

1. BTP 1 March 2037 – ISIN IT0005433195 – Coupon 0.95%, however, it must be verified on the basis of how the value fluctuates;
2. BTP-01ST49 – ISIN IT0005363111 – Gross coupon equal to 3.85% with a net yield for you of 0.99%;
3. BTP-01ST51 – IT0005425233 – Gross coupon equal to 1.7%, has a net yield of 1.31%, maturing in 2051;
4. Btp Tf 2,8% Mz67 Eur – ISIN IT0005217390, baptized by many as Methuselah due to its extremely long maturity, pays an annual coupon of 2.8%. Expires March 1, 2067. This is a senior note.

BTP that yields more

BTPgreen 1,5%Ap45eur today it is the BTP that yields the most. It has a net effective yield to maturity of 4.08%, with a gross coupon of 1.50%. Its maturity is set for April 30, 2045 and the issuer’s rating is BBB. It is a senior bond, so we can say that in some respects it is safer than others, and also it has a positive yield, albeit with a very long maturity, which could also be a disadvantage. However, it is a BTP with a very low rating, so for this very reason you I advise against to consider it for your investment.

How to choose a good BTP

Choose the best BTP on the market it means first of all controlling various factors that determine its life, duration, remuneration.

The most important factors to take into consideration are the following:

• duration: we are talking about a country, Italy, with a very complex debt situation, which means that there are possibilities, however remote, that a 30-year bond could create some problems in the future; the shorter the duration of the security, the more it must be considered reliable, generally without any type of exception;
• recognized interest: obviously we buy securities to earn money, or rather to grow the capital we have invested; this means that a BTP security that offers us higher interest must certainly be preferred; it is worth remembering that the interest on a BTP that was issued some time ago is not always reliable in assessing the degree of risk inherent in the security itself, because Italy’s debt conditions can change significantly, just as it can change the trust that the markets have in our country. We have seen it on the bonds I mentioned above which, despite being born with a very high coupon, today offer low yields on the secondary market.

To learn more about the topic, you can read the general guide to BTPs.

Watch out, bonds are making less and less worldwide

It is worth remembering that the bond market has been going through a rather particular phase for some years now. Since the time of Mario Draghi’s presidency, the ECB has begun the Quantitative Easing maneuvers which have lowered rates by moving many capitals towards riskier asset classes such as shares.

With the crisis triggered by the Coronavirus, then, the ECB and the FED have launched huge liquidity injection plans which for the next few years will continue to make the bond market stingy with satisfactions.

Best foreign government bonds

I will end with a reference to other countries as well, so as not to speak only of Italy. At a macro level, the situation is practically identical for what we could call foreign BTPs. They are not called BTPs, and therefore with this term I will refer to long-term bonds with coupons.

In this case we must add to the equation also the exchange factorwhen these bonds are issued in a currency other than the EUR: very high yields may in any case correspond to losses, should the reference currency fall against the euro.

The best bonds of the moment are the following:

1. German bonds: for those who want an investment in the most guaranteed and reliable country of the moment; it is not pro-Germanism, but a fact – Germany’s accounts are in order and will continue to be so for at least the next two decades – be careful though, the yields are very low;
2. Bond USA: the US economy, whatever the cassandras may say, is always one of the most dynamic in the world, one of those that manages to get up again with the greatest ease and return to important levels; net of the exchange rate risk, the yields are decidedly attractive;
3. PIGSat least those too big to fail: the bet here is for those who believe that European states cannot fail, at least when they are too big not to drag every eurozone country along with them. PortugalIreland and Spain have their accounts not exactly in order, but it seems extremely unlikely that another EU country will be left to die, at least until there is a proactive policy at the ECB such as we have seen in recent years.

Alternative ai BTP

If you want to stay in the bond market read mine too Guide to the best bond ETFs.

BTP latest news

At the end of September there was a forte rise in yields in the auctions of 5 and 10-year BTPs. BTPs were placed in this auction of securities maturing in August 2026 for 2 billion, for a demand of 3.67 billion and a yield that returns positive to 0.11%, (up 12 points compared to the August 31st auction)

Even more evident is the jump that was found in the auction of BTP at 10 years for 2.5 billion: faced with a request for 4.33 billion, the yield rose to 0.86%, +20 points on the previous placement.

The Treasury has also placed ccteu maturing in April 2026 for 1.75 billion: demand amounted to 2.76 billion with a gross yield of -0.21%.

On Thursday 26 January 2023 theauction of two BTPs, i.e. Btp November 2025 and Btp June 2025, which have a gross annual coupon of 2.5% and 1.5% respectively. The maximum amount of BTPs will be equal to 3.25 billion euros.

In February 2023 there were these issues:

• February 10th BOT auction;
• February 14 medium-long auction;
• 22 February BTP Short auction;
• February 23 BOT auction;
• February 24 medium-long auction.

Here you can read my review of the 2023 BTPs.

March 2023 issues

Also from March 6, 2023 there was one new issue of BTP Italy and the guaranteed minimum coupon was equal to 2%. The issue achieved a good result, since the bond maturing in March 2028 received requests for over 1.99 billion euroswith 80,119 contracts signed (327,333 total contracts in the three days).

The reason why many people are attracted by BTPs is precisely the advantage of having a guaranteed couponsince it could, let’s say, reassure savers about the goodness of their investment.

Another reason is that relating to taxation, which as you well know is 12.50%, therefore facilitated compared to the 26% of other investments. But it is also necessary consider the risksas the security may exhibit high volatility.

Conclusions: Which BTPs to buy today?

Is it worth buying BTPs? I have actually dedicated some reflections to this topic, claiming it is a scam. In another location I called them a trap.

In short, I’m not particularly in favor of this kind of investment as you will have understood! However, if you have already subscribed to them and wondering what to do when your BTPs are at a loss, I have written a guide to guide the readers.

I think I have told you enough on the subject and have given you some food for thought. If this is your first time on My businessFinally, I invite you to follow one of the thematic guides that you find below:

Good investments and good continuation on Affari Miei.