Independent Financial Advisor and Co-Founder of Affari Miei
January 31, 2024
Here is the first opportunity of the year to buy BTP Value: the date is February 26th, to mark on the calendar for those interested: there will be the first issue with the BTP Value February 2024.
The MEF (Ministry of Economy and Finance) has in fact announced what will be the third issue of the BTP Value.
Let’s now see all the information that has just been released on the instrument and above all, at the end of the article, we will try to understand together what we should also expect regarding the new issues during the year and above all I will provide you with mine opinions on the topic.
Let’s start!
This article talks about:
BTP Value February 2024: the characteristics
The BTP will be issued from 26 February to 1 March 2024.
It will have a duration of 6 years, and there will be quarterly coupon payments.
In addition to this, the 3+3 year “step up” mechanism promises interesting increases in yield. The expected Loyalty Bonus, an extra premium of 0.7%, adds a further incentive for those who maintain the investment until expiration.
However, the details of the guaranteed minimum rates and ISIN code are only expected to be revealed on February 23. Here on Affari Miei we will follow all the news to update you LIVE! 🙂
L’minimum investment is €1,000 and the BTP can be purchased either through home banking, in a bank or in post offices. Wide choice therefore for investors who want to opt for this instrument. The placement takes place on the Mot platform (electronic bond market).
Before continuing, I remind you that there will be taxation concessional rate of 12.5%, a treatment that concerns all Italian and European government bonds.
Expected returns and market analysis
Let’s now move on to performance btp value February 2024 that is, one of the most important things an investor considers when investing.
Although the official performance has yet to be communicated, we can still make hypotheses based on the secondary market and on what have been the past issues of the year 2023.
At the moment on the secondary market it is possible to purchase BTPs that yield approximately 3.06% net, or 3.5% gross.
Past issues, one in June and the other in October, had yields of 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 security in their portfolio until its maturity, and of 4.36% gross for the October issue.
The reduction expected interest rates by the ECB could lead to lower returns on average compared to the previous year, presenting challenges but also opportunities for investors.
Of course these are predictions based on the analysis of what has been and on interest rate forecasts, to know the yield we should wait until February 23rd.
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Outlook on new BTP issues in 2024
After a 2023 with significant emissions, the forecasts for new issues of BTPs in 2024 are linked to the maturities of existing bonds and the needs of the state sector, which should be 130 billion euros.
In fact, in 2023 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 and, doing a simple calculation, a total of securities were issued for a amount just under 516 billion euros.
The reduction in yields is expected due to the expected slowdown in inflation. Managing the Treasury’s cash holdings and improving secondary market liquidity conditions are key objectives that will affect new issues this year.
Risks of BTP investment Value of February 2024
Investing in BTP is not without risks, as many think. In fact, we often tend to make this mistake and consider the stock market as “dangerous” and risky, while the bond or government bond market is an almost entirely risk-free investment.
Be careful because this is not the case at all. I always want to underline this and try to “warn” investors, because by knowing not only the characteristics but also the risks of each investment, it is possible to make more informed choices.
Let’s see what risks you could face:
Volatility: linked to the duration of the investment period, which can increase or decrease. It is in fact important to understand that interest rates directly influence the value of BTPs: if interest rates increase, the value of BTPs already in circulation tends to decrease, while if interest rates decrease their value increases;
Issuer risk: refers to the possibility that the Italian state, in this case, goes into default. This is a remote risk, but it is still a possibility that must be taken into consideration and above all it is an eventuality that could occur. This is an important risk to consider, since it could lead to a total or partial loss of your capital.
BTP Valore February 2024: Opinions and reflections
We have reached the end, so we can try to think about it and try to understand whether investing in BTP Valore could be a correct choice or not.
Let’s say that the wait to know the performance official makes everything more difficult, since the convenience of the investment must be evaluated primarily by the yield.
Despite this, however, we can still make some reflections: first of all on the risks which, as you have seen, exist and are concrete and must be considered.
Secondly I want to talk to you about diversification: it is important, when investing, to think about your portfolio and asset classes.
If you have a wallet well diversified it may make little sense to add another similar instrument, especially if you have already purchased in 2022-2023 and now you are wondering whether to also buy this BTP Value: be careful because the risk of excessive concentration it could be real.
If you are new to asset management or want to learn more, I suggest you read this article in which I explain how to manage your funds effectively.
If you still really intend to invest in this BTp, then I can only advise you to think long and hard ponder make your choice carefully, because too much exposure to a single stock or a single country could be really risky.
Now I say goodbye and remind you to continue following us for more information on this tool, especially on the communication of performance.
I’ll also leave you some guide which you could read to improve your financial awareness and which I am sure you will find very useful for this investment:
See you soon.
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