On budget days such as those at the end of the year, as far as the Italian public debt is concerned, theperformance of Btp Italia already issued which on the market offer yields above 7 per cent. What the Treasury promised in terms of coverage compared to incredible inflation (equal to 11,8% in November), the BTP Italy he's proving it.
The Treasury calculates and publishes on its website the daily variation of inflation in the making. Now, as in the past months, the credits of the half-yearly coupons are particularly high. The most recent issue of the Btp Italia it dates back to last November when the Treasury raised a total close to 12 billion (11,99 billion). The one issued in June had collected 9,4 billion.
The formula for calculating interest provides for dividing the real annual coupon rate (1,6%) by 2 semesters and multiplying it by the nominal capital subscribed and by the indexation coefficient. The latter is obtained by dividing the reference index number of inflation (which excludes the share of tobacco and is communicated by the MEF) by the issue number (109,2). So for 10 thousand euros invested at the end of June, the coupon is approximately 725 euros (the sum of interest plus capital appreciation).
Btp: the prospects of reducing inflation will impact on the next yields
It is not certain that this coupon flow will continue, given that the prospects are for a reduction in inflation through restrictive measures by the ECB which aims to bring the cost of living back to growth of 2% per year. It is therefore necessary to look at the investment in perspective, for the entire duration of the security's life. It should also be noted that among the Btp Italia listed on the electronic market, there is for example the one with deadline April 2023 (Isin IT0005105843) which, in market fluctuations, drops sporadically even slightly below par, showing, as the dealers of the secondary market say, "a potential yield on repayment, which can currently be estimated over 10% on an annual basis".
Interest expenditure: special note
The other side of the coin concerns the expense that the Treasury will have to face to pay such high interest. There interest expense, one of the heaviest items of the Italian debt, is strictly observed by the MEF: “La higher inflation and significant rise in interest rates have had a significant impact on interest expenditure, above all due to the effect of interest on inflation-indexed government bonds” says the Treasury statement even if it specifies: “looking at the evolution of cash payments in the first eleven months of the year, the the volume of interest disbursed on government bonds is still decreasing (-1,5 billion) compared to the corresponding period of 2021".
Possible new issues of inflation-linked bonds by March
In these days the Mef communicated the quarterly schedule di emissions for 2023 and there is hope that others will be issued BTP Italy, even if they are not expressly mentioned: the Treasury says it reserves the right to issue securities "indexed to inflation" both "in order to take into account any dislocations of these securities on the secondary market", and with the reopening of others "no longer in issue price, to ensure the efficiency of the secondary market”. Instead, i will be offered regularly Btp indexed to European inflation (the Btpei).
The need fell thanks to higher tax revenues
in first eleven months In 2022, the state sector's cash needs fell to about $63,5 billion, from nearly $103 billion in the corresponding period last year. “The strong one reduction in demand (equal to more than 38 percent) is explained by growth in tax revenues and contributions and by the moderation of current expenditure in the state budget” says the Mef. The need benefits from 20 billion in grants received through the Recovery and Resilience Facility (RRF) in the two installments of the months of April and November, approximately 11 billion more compared to 2021, but also net of this factor, its reduction is equal to 28,5 billion.
For 2023 gross issues are expected for 310/320 billion
In 2023 le financing needs will be determined by the maturities of the outstanding securities which, net of BOTs, will be equal to just under 260 billion euros and the new state sector requirement for the year which, based on consistent preliminary estimates, il 2023 Budgetary Planning Document of last November, it should amount to around 90 billion euros. Taking into account the loans of the NGEU package and the cash flow management activity, with the information currently available, it is expected total gross emissions of medium/long-term securities in a range between i 310 and 320 billion euros.
Objective: progressively reduce emissions in the short term
In general there is the fear that the gradual reduction of purchases by the ECB could lead to liquidity gaps. So the document relating to the lines for 2023 says that “a progressive and scalar will have to be determined reduction of emissions in the short section of the yield curve"
For thethe next quarter are expected two new titles: a Short Term BTP, maturing on 28/03/2025 for a minimum amount of the entire issue equal to 9 billion Euros and a 3-year BTP, maturing on 15/04/2026 for a minimum amount of another 9 billion, specifying that for minimum amount refers to the value that the current security must necessarily reach before being replaced by a new issue with the same maturity.
Will be offered reopenings of Btp maturing 15/01/2026 coupon 3,50%, the BTP 01/04/2028 coupon 3,40%, the BTP 15/12/2029 coupon 3,85% and the BTP 01/05/2033 coupon 4,40 ,10%. Furthermore, in relation to market conditions, the MEF reserves the right to offer further tranches of nominal securities being issued with a maturity of more than XNUMX years, CCTeus.
In 2022 securities issued for over 424 billion euros, average life stable over 7 years
The budget for the year that is about to end sees aoverall issue of government bonds for a total amount equal to just over 424 billion euros, of which almost 285 billion euro of medium-long term securities and just over 139 billion euro of BOTs.
La average life at the end of the year it remained stable over 7 years (7,04 years, against 7,11 years in 2021).
