The sixth issue of the BTP Italia will start on April 14th. This was announced today by the Treasury which expects a good response also for this new placement. "The operation will certainly go well because the requests continue to arrive, but perhaps we do not expect the avalanche of the last few times", commented Maria Cannata, head of the Mef's Public Debt Department, underlining that there will be no cap on the issuance.
The new issue has some different characteristics from the previous ones. Firstly, it provides for two distinct placements between retail and institutional. In past issues there were not two phases but only one for retail and institutional together. In this regard, it should be remembered that the Btp Italia is a security designed, in terms of characteristics and methods, mainly for small savers, i.e. for people looking for a solution to protect their savings over time, even if in past editions it was also opened to professional investors. The new placement methods provide for a first phase which opens on April 14th and closes on the 17th intended for retail. Here the treasury will be able to decide on early closure but still guarantees a minimum of two days for the subscription of the security, on 14 and 15 April. The second phase will be held in a single day, on the 17th, and will be aimed at institutional investors. Here too, there is the possibility of closing the placement in advance before the natural end of the trading day, by giving 30 minutes' notice. "The Mef - reads the press release - guarantees the full satisfaction of the applications received on the Mot at a fixed price of 100 during the opening of the placement".
The second important difference with past issues is the duration of the BTP Italia which rises to six years from four. Behind this choice is the need to make the issue attractive in a scenario of very low rates. Which, explained Cannata, prompted "to lengthen the investment horizon" from four to six years.
On the other hand, the characteristics unchanged on the financial front: six-monthly coupons indexed to the Foi (ex tobacco) to which is added the payment of the recovery of the inflation accrued in the six-month period, (with the provision of a floor in the event of deflation), single repayment on maturity and premium loyalty for those who buy at issue during the first phase of distribution and keep the security until maturity. In the event of deflation, the coupons are in any case calculated on the nominal capital invested, therefore with protection extended not only to the principal amount, but also to interest.
The guaranteed minimum annual (real) coupon rate will be communicated close to the issue. The definitive annual (real) coupon rate will be set at the end of the order collection period, i.e. once both phases of the placement have been concluded, and may not be lower than the guaranteed minimum annual (real) coupon rate. The minimum denomination that can be subscribed is 1.000 euros or multiples.
The subscription methods are similar: the Btp Italia can be subscribed directly online through any home-banking system where the trading function is active. Alternatively, as with all other government bonds, you can contact the bank counter or the Italian post office where you hold a securities account.
The one in April is the first of the two issues planned for 2014 and it is the sixth when the BTP Italia were launched for the first time by the MEF in March 2012. In the past four issues, the BTP Italia have been subscribed for a total amount of over 65 billion euros, of which 22 billion in the fifth quarter of November 2013 alone.
The estimate of the total amount of public securities collected for 2014 is approx 450 billion, of which 27% has been achieved so far, around 120 billion. This value, explained Cannata, could decrease because the bots were reduced at the beginning of the year. “We've reduced the bots a little bit,” she said. But if the reforms of the Renzi government should make it necessary, "it is obvious that there will be an upward revision".
