Co-founder of Affari Miei
January 26, 2024
The Ministry of Economy and Finance announced the third issue of BTP Valuethe first opportunity for retail investors to buy Italian government bonds in this 2024.
Subscription will be open from Monday 26 February a Friday 1 March, until 1pm. As always on Affari Miei we will follow all the news and details in order to be able to form ideas opinions about the convenience of this BTp issue.
Let’s see the details together
This article talks about:
Characteristics of the BTP Value of February 2024
As usual, the MEF announces the characteristics of the title little by little. For now we know that the duration will be 6 years.
The coupons will see quarterly payments with increasing returns thanks to the 3+3 year “step up” mechanism.
The Loyalty Bonus is also provided this time, i.e. an extra premium of 0.7% for those who purchase during the placement period and maintain the investment until maturity.
Details on the guaranteed minimum rates and ISIN code will be revealed on February 23.
Minimum Investment and Purchase
L’minimum investment is 1,000 euros. The security can be purchased without commissions through home banking, at a bank or at the post office. The placement takes place on the Mot platform (electronic bond market).
It will be possible to access through your bank independently (home banking), by calling or by going to the branch.
Tax treatment
As always it will be there taxation concessional rate of 12.5%, a treatment that concerns all Italian and European government bonds.
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Is investing in the BTp Value of February 2024 risky?
We summarize the main ones risks connected to the purchase of Italian state bonds; for those who want to delve deeper there is also a video contribution in which all these aspects are explained in a more analytical way.
When it comes to investments, the volatility plays a fundamental role, especially in relation to the investment period. It is essential to understand that interest rates directly influence the value of BTPs. In particular, if interest rates increase, the value of BTPs already in circulation tends to decrease. On the contrary, a decrease in interest rates leads to an increase in their value.
This mechanism implies that fluctuations in the BTP secondary market can be significantly affected by these changes in interest rates.
Another element to carefully consider is the risk associated with the issuerwhich in this case is the Italian State.
How realistic is the risk of a default dell’Italia or a restructuring of its debt? Although this possibility may seem distant, it should not be overlooked. Such an event could lead to a total or partial loss of the capital invested.
Yield: what coupon to expect?
Even though we don’t yet know the yield, we can hypothesize it. On the secondary market today it is possible to purchase BTPs that yield approximately 3.06% net, i.e. approximately 3.5% gross. There is still a lot of time left for the official communication but, probably, we will have a yield of this type which will follow the general trend of rates in the coming weeks.
Is it worth investing in the BTP Valore February 2024? My opinions
Let’s say it clearly: it is too early to express ourselves because we don’t know the most important aspect linked to performance although we can still imagine it.
Expressing yourself about the convenience of a single title is difficult because you would need to know the situation of the person who is asking the question: for someone it could represent a good opportunity, for someone else it might not be worth it.
I can say with certainty that if you have a well-diversified portfolio it may make little sense to add another similar instrument: I imagine that thousands of people who have already purchased in 2022-2023 will be here again wondering whether to also buy this BTP Valore and for many, objectively, the risk of excessive concentration could be real.
If you are new to wealth management or would like to learn more, I suggest you read this article in which I explain how to manage your funds effectively.
If your only interest is investing in this BTp and little else, my advice is to be cautious. Too much exposure to a single stock or country can be risky; therefore, always consider diversification of your investment.
I conclude by reminding you that if you are looking for resources on the topic, here you will find some articles that may interest you:
This article will be updated in the coming weeks as the MEF releases further details.
See you soon.
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