(currently being written)
He Mef announced today the details of the fourth edition of BTP Valorelaunched by the Meloni government from last Monday 6 May to Friday 10 May.
Last Friday, the Treasury announced the final coupon rates and the total amount of orders, this time have exceeded the threshold of 11 billion euros.
Today the Ministry of Economy and Finance communicated the details of the fourth placement of the government bond aimed exclusively at retail investors, specifying that the amount issued was equal to 11,226.556 million euros against 384,295 contracts concluded, with an average cut of 29,213 euros.
The Mef has published the table which summarized the value of subscriptions and the number of contracts in each of the five placement dayscommunicating that, of the 384,295 contracts concluded on the MOT (the Telematic Market of Government Bonds and Securities of the Italian Stock Exchange) approximately 66.4% were for amounts less than 20,000 euros, while if contracts up to 50,000 euros are considered, the incidence was approximately 90.7 percent of the total.
The Treasury also announced that, from the information collected from Dealers, Co-Dealers and other intermediaries, it emerged a participation of retail investors significantly prevalent compared to that of private banking, with a share of 72 percent.
Finally, within the share subscribed by retail investors, approximately 55 percent forwarded the order through the branches of the banking networks and post offices (either by physically going to the branch or remotely), while the remaining 45 percent through home banking.
Regarding the geographical distribution of orders received, almost all of the orders came from domestic investors.
It’s worth recapping the trend of the previous three editions.
The first BTP Value had a maturity of 4 years, fixed returns increasing over time (the so-called step-up mechanism) and a final extra loyalty bonus equal to 0.5% calculated on the invested capital, with ISIN code during the placement period of IT0005547390.
The first edition of June 2023 gave shape to the dream of Autarkic BTPas had been particularly anticipated by the newspaper The Republicon which according to press rumors the Meloni government had started working immediately after taking office, in October 2022.
The mission “more government bonds for Italians” would be made official later by Prime Minister Giorgia Meloni at the beginning of 2023.
The BTP Valore was finally issued by the Mef-Ministry of Economy and Finance, which presented it as a “new family of government bonds reserved for small savers (retail market)”, which could be subscribed “in the bank, at the post office, wherever you have a securities account, but also online through your home banking”.
The minimum rates, later confirmed, they were at 3.25% for the 1st and 2nd year and at 4.00% for the 3rd and 4th year.
Growing over time the rates were structured according to a “2+2” logic with a fixed rate for the first two years of the security’s life and another, higher fixed rate for the remaining 2 years, until maturity.
In everything 54,675 contracts would have been signed, with an average cut of 27,786 eurosin the placement period which started on 5 June and ended on 9 June 2023, for a value exceeding 18 billion euros.
Regarding the geographical distribution of orders received, almost all of the orders had come from domestic investors (around 99 percent), i.e. by small Italian savers, who had responded with great euphoria to the appeal launched by Prime Minister Meloni.
The second edition of the BTP Valore started from 2 to 6 October 2023: the new government bond aimed at individual and similar savers this time had a duration of 5 years and an extra final loyalty bonus equal to 0.5% of the invested capital.
With ISIN code IT0005565392, the BTP value offered minimum guaranteed coupon rates which would be confirmed with the announcement of the definitive rates at the end of the placement. The proposed rates were even at 4.10% for the 1st, 2nd and 3rd year and at 4.50% for the 4th and 5th year.
The success of the BTP Valore was an encore: the issue concluded with requests for 17,190.004 million euros, therefore over 17 billion, against 641,881 contracts concluded, with an average cut of 26,781 euros.
Also in this case, almost all orders came from domestic investors.
Prime Minister Meloni responded proudly to those who had highlighted in those days the pessimism of the financial markets towards Italy due to a Nadef (Update note to Def) ,which, in particular, with a not at all reassuring outlook on deficit-GDP ratio, had put investors who were betting on Italian government bonds on the alert, in view of the highly anticipated announcements on the rating of Italian public debt.
Those judgments would come without giving rise to shocks which had been so feared by Italy.
It would especially be the big news of the no Moody’s junk rating for BTPs and Meloni’s Italy to deny the worst concerns about the fate of the country, to the delight of the Prime Minister, who praised not only the BTP Valore but also the decline in the BTP-Bund spread.
Meloni thus made a crucial decision, which would provoke several discussions: in order to promote the saving role of BTP People, Government bonds were, with the 2024 budget law, excluded from the ISEE calculation.
At the end of January this year, the Italian government went further by announcing the third edition, or the first act of 2024 of the BTP Valore.
The new BTP Valore took the form of a government bond with a duration of six years, coupons paid every three months with pre-established returns increasing over time based on a 3+3 year ‘step up’ mechanism, and an extra final loyalty bonus of 0.7 percent.
The third edition of this new government title dedicated to retail, with code ISIN IT0005583478 was launched on Monday 26 February, continuing until Friday 1 March, presenting the following rates:
3.25% for the 1st, 2nd and 3rd year; 4% for the 4th, 5th and 6th year.
That would have been the Treasury’s all-time record issue: 18,316.424 million euros were raised, or more than 18.3 billion euros.
Absolute record not only in terms of subscribed value, but also by number of registered contracts: 656,369in a single placement of government bonds for small savers.
Meloni’s umpteenth big gamble was welcomed with a boom in orders, but also with a boom in criticism, both because that new BTP value had been presented by the government essentially as a title to go on a cruise and because, at least in the first stages of the new issue, it was not yet clear what the legislation was in relation to the calculation of the ISEE, given the bombshell announcement from INPS dropped at the beginning of 2024.
Various statements from Meloni which accompanied the resounding success of the BTP value. “To invest well” said Prime Minister Meloni, while in just two days orders flew beyond the threshold of 11 billion, practically at the same level as the fourth and final edition, which has just ended.
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The fourth edition of this special government bond has also arrived, announced by the Mef in April, characterized by lower minimum coupon rates, and a richer loyalty bonus.
The Prime Minister continued to push this title, launching a new appeal to the BTP People audience so that they continue to take the place of the ECB’s QE-Quantitative easing, gone in the attic for a while.
This last fourth act of the BTP Valore was presented by the Mef as a special issue, as it was conceived for those who were unable to participate in the previous edition, “which took place with widespread recognition at the end of February”, as the Mef recalled in a note.
“This also explains why the proposed tool presents substantially the same structure as the previous one”the Ministry of Economy and Finance had specified.
With code ISIN IT0005594491 the new government bond dedicated exclusively to retail investors made its debut on the MOT (as did the previous ones) last Monday 6 May, until Friday 10 May.
With a 6-year maturity, the BTP Valore was characterized by annual coupon rates, then confirmed at the closing of the placement, equal to 3.35% for the 1st, 2nd and 3rd year and 3.90% for the 4th, 5th and 6th year.
With an extra final premium, equal to 0.8% of the nominal capital invested, the new government bond allowed the State to raise more than 11 billion euros in the five days of placement.
It was immediately clear that retail investors’ demand for this government bond would be quite weak.
The numbers remain decent, given that the amount raised has exceeded 11 billion euros. However, the figure pales in comparison if we consider that each of the previous editions had allowed the Treasury to collect, on average, 18 billion eurosso much so that someone didn’t think twice about expressing some doubts about the debt nationalization strategy launched by Premier Meloni, while someone else also warned about the risk that weaker demand would have on Italian paper in general.
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