Co-founder of Affari Miei
January 8, 2024
Il 2024 it has just begun and yet investors are already thinking about how to invest and above all which instruments to invest in. THE BTP Italy e Btp Value they have always been considered by investors to make an investment: the popularity of these instruments is under a magnifying glass and for this very reason it may be interesting to see when there will be new BTP issues.
In this article we will see what they are forecasts about new BTP issues, such as possible returns and we will try to answer all questions about an investment in this sense.
How was 2023?
Il 2023 has just ended, therefore, before seeing the forecasts for 2024 it is good to take a look at the past both to get an idea of how the market performed and to understand what the numbers.
We had some emissions of medium-long term securities for a total of just under 360 billion euros.
The BOT release they were instead equal to approximately 156 billion euros.
Doing a simple calculation, a total of securities worth one were issued amount just under 516 billion euros.
The last issue was BTP Value October 2023 who had a overall request equal to 17.19 billion euros.
More emissions in 2024
In the 2024 there will be issues that will mainly be due to the maturities of the securities in circulation which, net of BOTs, will be equal to 265 billion euros.
The emissions they will also be related to the new state sector requirement for the year which should be equal to 130 billion euros.
The issues that we will have during this year are aimed above all at continuing the efficient management of the Treasury’s liquid deposits and contributing to a progressive improvement in the liquidity conditions of the secondary market.
Possible returns
In 2023 we had two issues of BTP Valore, one in June and the other in October.
The yields of these two BTPs were, respectively, 3,25% in the first two years and then again 4% in the subsequent ones, without forgetting the extra premium of 0.5% for those who will hold the bond in their portfolio until its maturity, and 4.36% gross for the October issue.
These two issues have encountered a notable number of requests and, precisely for this reason, and also because in 2024 two BTP Italy for a total of approximately 12 billion euros, to be able to satisfy the demand of institutional and retail investors and to be able to provide a now consolidated instrument for the protection of their savings, the Treasury “will evaluate the opportunity to carry out one or more issues of BTP Italia during the yearreserving maximum flexibility in choosing the most appropriate deadline for the new title“.
We do not yet know what the yields of these new issues will be but, most likely, retail investors will be able to witness at least two BTP issues.
There will also also be emissions of BTP Green to keep an eye on, because it seems that there is also attention towards these tools.
That said, realistically, what can we expect in terms of net return?
Given that what we write must be taken with the benefit of inventory, investors’ expectations this year see the reduction of interest rates by the ECB due to the expected slowdown in inflation.
This should lead to gods lower average returns compared to those of last year because market conditions are expected to be less favorable (for investors) in the coming months.
This aspect is good news for the State, for the MEF and for taxpayers – less interest = less public debt – but clearly it may not smile on investors, and therefore also on you who are reading this article.
If this were the case, however, you would be in good company because the trend would concern all European government bonds so it would be difficult to find better conditions elsewhere, given the same risk.
Is investing in BTPs risky?
We must always remember, however, that every investment is not free from risks, and knowing them makes us more aware and more ready to make the investment and its possible losses.
Let’s see what they could be risks which we would face if we were to invest in BTPs.
First of all we should take into consideration the volatilitywhich may increase or decrease in relation to the duration of the investment period.
Let’s try to better understand what could happen: if interest rates increase, then the price of previously issued BTps decreases, if interest rates decrease, then the price of previously issued BTps increases.
Another important risk is that relating to the country that issues the instrument (in this case our Italy), and it is the issuer risk: how many chances are there that Italy will face the default or to a debt restructuring? This risk, although remote, should not be underestimated because it could have repercussions on your investment with a partial or worse, total loss of the invested capital.
So before investing lightly I advise you to reflect and think carefully about your choice, taking all the possibilities into consideration and above all trying to be aware of these risks.
Conclusions
I think I’ve told you everything you need to know about new BTP issues in 2024.
Now we just have to wait and see if in the next few months the MEF will give us further information or will already set the release date.
In the meantime I invite you to consult these resources which may be useful to you to delve deeper into the topic of BTPs:
If, however, you are trying to start your investment journey in a conscious manner as an independent investor, then I recommend you find out more here:
Enjoy the reading.
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