Those who believed in the Italian debt and didn't panic have brought home a good profit in recent months: a 7-year BTP bought in November when it yielded over 5% and sold today, paying under 18%, has yielded well XNUMX%.
“Those who subscribed to government bonds at that time made excellent profits – explains Angelo Drusiani of Banca Albertini Syz – it is the 3-year and 2015-year bonds that have had the greatest improvement. Today the outlook still looks good. The only problem is represented by the political situation: we have to see if the parties that are supporting the Government will enter into fibrillation in view of the administrations. I think the tenth anniversary is still worth taking advantage of: if nothing particular happens on the political and international front, I think it still has good prospects. For those who have little risk propensity, 2,70 years are better, a BTP in 2,80 today yields around XNUMX-XNUMX%”.
Claudia Vacanti, Bg Sgr investment manager also explains: “At the end of November, a 5-year Btp in August 2017 was worth 90 with a yield of 7,5%, today it is worth 107 with a yield of 3,85%. The gain of those who then had the cool head to buy these securities is now around 20%, with slightly lower returns for shorter terms and slightly higher for longer terms”.
How did the managers deal with these months of turbulence in the spread?: "With the change of executive and the new maneuver, the market slowly began to ease tensions after we had witnessed a dramatic widening of the spread at the beginning of September and a of prices. From December 5, the market went through three phases: the spread on the shorter stocks closed, which were the first to recover; then it was the turn of titles up to XNUMX years; finally from January the long parts also went. From mid-September onwards we bought short bonds while with the change of executive we extended the maturities riding the three waves”, explains Vacanti. Sure, probably the best opportunities are now behind us. But the spread closing trend still has some way to go. For the future, two/three-year maturities will then be helped by the two Ltros of the ECB.
“With all the money that the ECB has injected into the system – continues Vacanti – we believe that the spread on short parts is destined to close further and that is what is already happening. At the moment the spread on the 175-year BTP is around 3 basis points and 230 for 30 years, without thinking of returning to the XNUMX basis points when the market did not price the risk in the Eurozone, there is still room for recovery. The three-year ECB loans have in fact removed the risk for this period of time, naturally the gains will be reduced compared to the past but also the risk of fluctuations will be lower”. However, those aiming for a greater capital gain by taking on greater risks are now looking at the ten-year term.
“With ten-year BTPs – says Vacanti – if there is a reduction of 50 basis points in the spread, you can earn more because they have more duration leverage. For example, if today the BTP yields 4,85% and the spread drops to 250, the security can be revalued by 3-4 percentage points to add to the coupon. I think it's a scenario within our reach. If we manage to get close to a balanced budget in 2013, we would find ourselves in a unique scenario and with a sizeable primary surplus despite high debt at that point”.
But it's not just BTP. Among the first to suffer evidently as early as July were also the Cct variable rate securities: the market treated them as a zero coupon on 7-year maturities and in a few weeks they lost 10 percentage points in price, which for a security variable rate is not cheap. “The Cct at 7 years old – Vacanti points out – plummeted, then during the summer it remained there forgotten and only recovered recently. For example, the Cct on 15 October 2017 reached a minimum at the end of November at 76, only in mid-January did it start to recover and now it stands at 93 with a discount margin of 221 points and a yield of 3,35% and there is still room of recovery. The Cct are securities that have less professional market but more than drawers because it is more difficult to hedge ".
