Btp Italia, yield at 2% plus inflation recovery. But the duration is shorter

Launched departure for the Btp Italia, now in its nineteenth issue. The placement of the Italian government bond closed the first day with orders at 3.6 billion, higher than the 3.2 billion of the previous placement in mid-November (12 billion the total at the end on that occasion). 132,334 contracts were signed.

Btp Italia: coupon, yield and simulation. Is it worth buying it? The complete guide

Btp Italia, sprint start

The BTP Italia has so far convinced over 2 million Italians: in fact, 2.39 million contracts have been signed since 2012 for a total amount of over 193 billion euros. Meanwhile, the Minister of Economy, Giancarlo Giorgetti, raises the alarm on the rise in interest rates, which – he explains – “creates serious problems for those with heavily indebted balance sheets like Italy’s”. “The approach” of the government on public finances, he continues, “has been prudent and responsible and we will continue in this sense”. “Having tidy accounts is an absolute requirement for our country, which must maintain the confidence of the markets”, adds the minister, in order to avoid an increase in “financing costs” and “avoid repercussions” for families and businesses.

The bond offered by the Treasury promises to be an anti-inflation bulwark. In fact, the bond will yield at least 2% to which the recovery of inflation will be added. A characteristic that with the current level of price growth (5.5% that already acquired for 2023) brings the return on the stock to over 7%. Obviously if the cost of living, as everyone expects, has already reached its peak and will drop in the coming months, the yield of the Btp Italia will also decrease. However, the new issue guarantees a more generous minimum interest rate than that of the last placement, the BTP Italia with a maturity of 22 November 2028 and a coupon of 1.6 percent. One way to try to bring more and more savers closer to government bonds in a context of rising rates.
The definitive coupon will in any case be established at the opening of the fourth day of issue, ie Thursday 9 March, and may be confirmed or revised upwards with respect to the one communicated (but not lowered). In more detail, the bond is indexed to price trends (Foi index for blue and white collar households, calculated net of tobacco products), with coupons paid every six months together with the capital revaluation due to inflation. The duration this time is shorter: it goes from 8 and 6 years of the two editions of Btp Italia in 2022 to 5 years of this placement. A loyalty bonus equal to 0.8% of the invested capital is envisaged for those who subscribe to the security on offer and keep it in their portfolio until the expiry of 14 March 2028.

THE SUBSCRIPTION
In short, the investment appears attractive in terms of rate of return, even if among the analysts there are those who point out that with inflation falling and rates still rising for the moment, it is not certain that the BTP Italia will ultimately be cheaper than a normal fixed-rate BTP of the same duration (which currently yields just over 4%). Finally, to subscribe for the bonds, you can go to the bank or post office and you can also purchase them online. The minimum denomination is one thousand euros. The first phase of the sales period, dedicated to small savers, will take place until tomorrow, unless it closes early.

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