The demand for Btp Italia rises to over 6,5 billion euros on its last day of membership. The Deputy Minister of Economy Vittorio Grilli is satisfied: “Our families have appreciated this product, it is part of a normalization of our market. Investors are back to believing in our public debt".
The Btp Italia is a government bond tailored by the Treasury for small savers which can be purchased, as well as in the bank, directly online on the Mot platform of Borsa Italiana, instead of the traditional auction mechanism. It is a four-year bond indexed to Italian inflation with semi-annual coupons. The security ensures a guaranteed minimum real rate assigned at 2,25% but the definitive rate will be communicated at the end of the subscription based on market conditions and cannot in any case be lower than the minimum. A "loyalty bonus" of 4 per thousand gross on the nominal value of the investment is also envisaged for those who purchase the securities upon issue and hold them until maturity. The final return will depend on how inflation plays out: the fixed interest rate is calculated on the capital revalued according to the inflation of the reference semester on the basis of the Istat index on consumer prices for families of workers and employees (Foi) with the exclusion of tobaccos. In the event of deflation, the coupons are in any case calculated on the nominal capital invested, therefore with a double protection: on the capital and on the interest. It can be traded like all other government bonds. Similarly, the tax rate is 12,5%. As well as for other medium and long-term government bonds there is no bank commission on subscription, while for early sales or purchases after the issue date, any commissions are those agreed with your bank.
“Typically – explained Grilli at the presentation of the new tool – Italian families buy Bots, which are up to one year old. We have therefore tried to create a bridge, not up to the tenth anniversary of the BTP, but an average investment of four years. We try to adapt our needs as a Treasure to those of families”.
E the response of small savers was important, already from the first day of placement on 19 March with a request for 1,57 billion already above the minimum target of the issue set at 1,5 billion. In a short time, the upper part of the range expected at 2 billion and now was also exceeded on the last day of the placement, demand now exceeded 6,5 billion. In the face of a minimum denomination of 1000 euros, most of the demand concerned cuts between 1000 and 10.000 euros and a substantial share of cuts up to 50.000 euros. There was also no lack of interest from institutional investors. Several issues of this title are planned for 2012 and will be communicated on the website of the Ministry of the Economy.
The issue kicked off on Monday at a time when the Btp-bund spread was consolidating the drop below 300 basis points from the highs of recent months to 500 basis points, a sign of a return of interest and confidence in Italian debt. However, just in recent days the tensions over Spain and between the social partners in Italy over the labor reform, a difficult testing ground for the political stability of the Monti government, have brought tension back into the differential which today is rising to 318 basis points.
In the meantime, rumors are arriving from Brussels on the solidity of the path taken by Italy. European sources told the Ansa agency that Italy "does not need an additional manoeuvre" and seems well on its way towards balancing its budget in 2013, as promised to Europe which now expects "a further growth-oriented effort" . A confirmation of what was repeated by Monti himself who repeatedly ruled out the possibility of new reforms, assuring the existence of safety margins in the maneuvers adopted even in the event of a worsening of the economic scenario.
