Higher minimum rates and the new formula with double loyalty bonus are not enough to raise the demand for the BTP Futura, a government bond dedicated exclusively to retail investors.
The third issue closed yesterday with € 5.48 billion raised, thus doing slightly worse than the first two issues. In the five days of placement, 132,296 contracts were concluded with an average denomination of 41,400.22 euros.
The first two issues of the BTP Futura had in fact concluded with subscriptions of 6.1 and 5.7 billion euros respectively.
The numbers of the issue
Demand has been dropping over the course of the days. Come on promising 2.28 billion on the first day, the second went to 1.39 billion, the third 1.01 billion, the fourth and only 327 million. Of the contracts concluded on the MOT (the Telematic Market for Bonds and Government Securities of the Italian Stock Exchange), about 60 per cent were for an amount of less than 20,000 euros, while if we consider contracts up to 50,000 euros, we arrive at around 86 percent of the total.
The Treasury notes that, although the issuance methods do not allow to have precise data on the characteristics of the investors, from the information collected by Dealers, Co-Dealers and other intermediaries, it can be inferred that the participation of retail investors was prevalent compared to that of private banking (with a share of 57% and 43% respectively. Within the share subscribed by retail investors, it is estimated that about 66 percent have placed the order through the branches of the banking networks (both physically going to the branch and by forwarding the order remotely), while about 34 per cent through home banking.
As regards the geographical distribution of the orders received, almost all of the orders came from domestic investors (approximately 97%).
Coupon rates and characteristics of the third Futura BTP
The third issue of the BTP Futura, with a maturity of 16 years, provides for nominal annual coupon rates, paid on a half-yearly basis, respectively equal to 0.75% for the first four years, 1.20% for the following four years, 1.65 % for the next four and 2% for the remaining four years of the title.
The BTP Futura has nominal semiannual coupons calculated on the basis of pre-established and increasing rates over time (the so-called meccanismo step-up).
There is a double loyalty bonus: at the end of the first eight years of the bond’s life, the investor who has held the Futura BTP since its issue will be entitled to an intermediate premium equal to 40% of the average growth rate of nominal GDP recorded by ISTAT in the first eight years of life of the title, with a minimum of 0.4% of the invested capital, up to a maximum of 1.2%,
At the final deadline (after i next eight years), investors who have continued to hold the security without interruption from issue to maturity, will be paid a final prize which will include two components: the first equal to the remaining 60% of the average GDP growth rate recorded in the first eight years of the title, with a minimum of 0.6% up to a maximum of 1.8%; the second equal to 100% of the average GDP growth rate recorded by ISTAT from the ninth to the sixteenth year, with a minimum of 1% and a maximum of 3% of the invested capital.
Adding the tranches, for those who hold the security to maturity, the premium ranges from a minimum of 2% to a maximum of 6%, that is double compared to the 1-3% range that characterized the first two issues which had shorter maturities.