With a'inflation galloping the Treasury's offer of a new Btp Italia issue indexed at national consumer prices it seems to fall appropriate for those who want to protect their capital from erosion.
The offer will start on November 14th for a 6-year title. Attention is paid to the minimum guaranteed price which will be communicated on 11 November because it is necessary to better evaluate the inflation prospects which in September showed an increase on a monthly basis of 0,3% and on an annual basis of 8,9% from 8,4% of the previous month.
Btp Italia new issue: the characteristics
The Treasury returns for the second time in a year to offer its Btp Italia. The characteristics of the security are substantially in line with those of the previous issues, says the Ministry of the Economy and in particular - a factor that makes the security particularly appetizing - the double loyalty bonus at 8 per thousand for those who hold the title until deadline. Compared to the June issue (maturity 2030 which costs around 97,8 cents), with an eight-year maturity, the duration will be slightly shorter, set at six years, i.e. until 2028.
As usual, the security will be placed on the market in two phases: the before purchasing, stage will run from Monday 14 until Wednesday 16 November, unless closed early, and will be reserved exclusively for individual savers and similar (the so-called retail market). The second stage will take place in the morning of the day 17th November and will be reserved for investors only institutional. THE guaranteed minimum rates they will be communicated on November 11th. The Treasury Department of the MEF provides all information on coupon calculation, calculation examples and indexing mechanism.
As with the previous issues, retail savers will be able to subscribe to the BTP Italia wherever they hold a securities account, at a bank or post office, even using their own home banking if enabled for trading functions. The placement will take place on the MOT electronic platform (the electronic market for bonds and government securities of Borsa Italiana) through Intesa Sanpaolo and Unicredit, the two dealer banks.
How convenient will the next Btp Italia be?
When buying an inflation-linked security, the first question to ask is: How much do I expect prices to rise over the years corresponding to the life of the security?
Economists, and even central banks, are divided. On the one hand there are perspectives of rate hike from the Central banks to curb the price hike. But on the other hand, some are starting to report the first symptoms of an economic slowdown starting with the drop in the price of gas or copper which could lead to a drop in inflation, at least from the peaks seen so far.
"At the moment we have seen a continuously rising inflation trend, but are we sure it will continue like this for all these 6 years of the security's duration?" asks a dealer of the primary market "we need to see how much the economy will hold up to this inflation or if there will be an economic slowdown or recession, because then prices too will have to give way".
Another thing to consider are the other BTPs already on the secondary market not indexed to inflation of the same duration which nonetheless have very attractive coupons. A non-indexed 6-year BTP offers a yield of around 4,20% in line with the coupons of already issued BTPs. “For this reason it will be important – to evaluate the full opportunity of the investment, which in any case is appropriate, the guaranteed minimum price that will be declared” says another dealer.
This minimum price will be communicated by Teso on next 11 November.
Btp Italia 14 November: issue number 18. In June, 9,4 billion raised
I BTP Italy they are the only Italian government bonds indexed to the national inflation rate. Every six months they pay fixed-rate interest 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 tobacco.
That of November represents the eighteenth issue of this type. The latest dates back last June when funding had been 9,4 billion. In 2020, the collection mostly intended to combat the Covid emergency had been 22,3 billion.
Watch out for the behavior of investors on Italian debt
Attention obviously goes to the Italian public debt in general which always remains the weakest point of our country given the monster amount of 2.758 billion euros in August according to Bank of Italy data, albeit down by 13 billion from the previous month, but up by about 45 billion compared to a year before . But above all the attention is paid to the sustainability of this debt, with attention to investors.
In the tables on Target2 balances in the Bank of Italy publication "Balance of payments and international investment position" it emerges that between September 2021 and August 2022 foreign portfolio investments in Italian public securities decreased by almost 100 billion euro: the 12-month balance in August in fact indicates a net outflow of 99,767 billion, while in August alone foreign investors divested 6,9 billion of Italian public sector securities
