“For years it has been the main investment destination for families and financial operators, the well shelter par excellence of Italian savers. Over the past fifteen years, it has had one of the best risk-reward profiles in the world. But the golden season of the BTP it's running out forever." This is what emerges from the interesting essay by Massimo Figna, Riccardo Sabbatini and Alberto Cordara (see the profiles of the three authors below) which is not by chance entitled "The end of the BTP is the rebirth of Italy" published by GueriniNext (p. 142, 16 euros) and which will be presented next Tuesday in Rome and on 25 June in Milan.
Back in 2010 investors had suddenly discovered that i government bonds they could hide a risk. Five years later they are experiencing an even less excusable weakness: they make less and less. Barring a sensational breakup of the euro and the eurozone in the next five years ten-year government bonds are unlikely to yield more than 2 percent.
There are many the causes. a season of low economic growth e low inflation in Europe crushes bond yields to a minimum. But 'the death of the btp' is above all the result of the process of financial integration in Europe, which had two fundamental stages in the birth of the euro and in the launch of the banking union: the model of supranational supervision which in November 2014 transferred the major European banking groups under the direct control of the European Central Bank. the massive government bond purchase plan (the 'quantitative easing') announced in January 2015 by Mario Draghi's ECB is the consequence of those choices. And it will contribute even more to flattening government bond yields.
The effects of this new season for Italy and its financial industry will be impressive. The reallocation of investments, from government bonds to other destinations (shares, bonds, investment funds), will contribute to the modernization and development of financial markets. In the banking sector, the capital requirements imposed by the new supervisory rules are leading to a significant rationing of credit. A true Copernican revolution for a country accustomed to relying on banks to finance the economy. Businesses that see bank financing refused increasingly encounter capital offered by those who, having abandoned the safe haven of the btp, are looking for other opportunities on their way. Since the announced death of the btp, new forms of life are sprouting which the hegemony of credit over finance and of the state over the economy had so far prevented from seeing growth. At the same time, if it is true that each point of reduction in the cost of Italian debt is worth 1,4% of GDP, the drop in rates on XNUMX-year bonds can free up resources to finance investments and the country's growth. It is an opportunity not to be missed.
THE AUTHORS
Massimo Figna is the founder of tenax capital, an investment management company based in London. For ten years he has been the manager of Tenax global financial fund long / short, a hedge fund that has achieved returns higher than the global index of hedge funds. Previously head of insurance research at UBS, he has repeatedly been voted among the top three best European insurance analysts.
Riccardo Sabbatini, journalist, for many years has dealt with issues related to the regulation of financial markets at Il Sole 24 Ore. He is the coordinator and author of the book Il Sole 24 ore, leader in economic dissemination in Italy with over 300 copies sold.
Alberto Cordara is Bank of America-Merril Lynch's Italian banking analyst with XNUMX years of experience in the city (M&A/research). On several occasions voted at the top of the Italian rankings and among the best European banking analysts.
Attachments: Presentation Book Fine Btp is the rebirth of Italy.pdf
