I Interest-bearing Postal Bonds (Bfp) are confirmed as one of the preferred choices by Italian savers. In 2012, 5,6% of households held investments in postal savings bonds, and the total value of these amounted to 213 billion euro. Is this huge success totally explained by the characteristics of the product or is there something else?
Interest-bearing bonds are associated with an idea of security, because Italians still have a sense of trust in the post office and because bonds enjoy public guarantees and simplicity, they were designed to meet the needs of small savers. In particular, the feature most appreciated by savers is that the Interest-bearing Bonds can be repaid before expiry, receiving the total capital paid and, in some cases, the accrued interest.
Are the values that are associated with these financial products still verifiable? Over the years, the offer of postal savings products has suffered the same fate as many financial products, moving away from the most basic needs of savers, i.e. having an economic and effective tool for preserving one's capital, net of taxes and inflation. The offer of Bfp also changes according to the time horizon of the investment, the fixed, increasing or variable rate formula, the indexation to inflation or the trend of stock indices, so much so that the choice alone could require evaluations for nothing discounted for the majority of savers or the intervention of a consultant.
Bfp are issued and guaranteed by Cassa Depositi e Prestiti and placed by Poste Italiane. The origin and public guarantee, as well as the almost identical tax regime, suggest comparing them with government bonds with comparable maturities.
Let us consider, for example, the most classic of these products: the ordinary. They have a maximum duration of twenty years and offer increasing returns over time. In the first year, a gross yield equal to 0,25% is obtained, in the second year equal to 0,5% and to grow up to 4,75% from the eighteenth year. Although the latest yields appear attractive, by comparing the annual effective rate with that of a government bond with corresponding maturities, we note that the latter offers a more generous yield. Remaining invested for 5 years, the effective annual rate offered by the interest-bearing bond is 1,05%, against 2,1% for a government bond (double). Even holding the Bfp for several years, the situation does not change: over 10 years it yields 1,92% against 3,55% of the government bond and over 20 years it yields 3,05% compared to 4,2% of the bond governmental.
In short, postal savings bonds offer systematically lower yields than government bonds, as if the Post Office were considered less risky. What explains this difference in yield is only the possibility of not being subject to price changes, because the capital invested in Bfp is repaid in full at any time.
Another, convincing, explanation for the enormous diffusion of these instruments is the widespread presence of post offices throughout the country and the central role that these play in the financial life of many citizens, above all for the universe of pensioners and in small and in rural areas. It almost seems that the Post Office has taken on the habit of many banks, of taking advantage of its centrality in the financial choices of customers, to sell them investment products that serve the interests of the seller more than the saver.
