The placement of the fourth issue of the BTP Value. From today Friday 3 May the guaranteed minimum rates in the first three years and in the following three years, together with the ISIN code that identifies the security in order to proceed with the purchase. The placement it will close on Friday 10 May (at 1pm), unless closing early.
As happened on the occasion of the three previous placements, the BTP Valore is exclusively dedicated to small savers, who can buy it:
- on your home banking (if enabled for online trading functions) if you have a securities account
- through a contact person from your bank
- at a post office, if you are the holder of a securities account
Step-up coupon forecasts
The last placement of the BTP Valore set the coupons at 3.25% for the first three years and 4% for the following three years. And this time? We will know tomorrow, Friday 3 May, and it will be a choice linked to the performance of the markets. The fixed coupon Treasury bond currently offers around 3.50% for the six-year maturity. This means that, roughly speaking, the bond being issued will have to promise something similar as an average over the six years. It is possible that the Treasury does not want to lower the first coupon rate, in order to offer the retail investor the prospect of a return for the first few years at least equal to that offered with the bond of two months ago. This means that the rate of the second coupon, the one paid starting from the fourth year and until maturity, could be slightly lowered.
There are those who make predictions (which will have an answer tomorrow, we’ll see) for the rates of the next BTP Value:
- 3.25% for the first three years
- 3.75% from the fourth year to maturity If these data are confirmed, the bond will offer a net return of around 2.84% for the first three years and 3.28% for the following three.
On average, it would stand at just over 3.05%. If we include the loyalty bonus, we arrive at around 3.20%. On paper a good investment. Much will depend on expected inflation.
Conditions and taxation
The new issue of BTP Valore will have a duration of six years, coupons paid every three months with pre-established and increasing returns over time based on the 3+3 year “step up” mechanism we talked about. The final extra premium will be equal to 0.8% for those who purchase it during the placement days and hold it until maturity. The investment can start from a minimum of 1,000 euros, always having the certainty of having the requested amount subscribed. The security is purchased at par (price equal to 100) and without commissions during the placement days. The usual preferential taxation for all government bonds is envisaged at 12.5% on coupons and loyalty bonus, exemption from inheritance taxes, as well as – as provided for by the budget law for 2024 – exclusion from the calculation ISEE up to 50,000 euros, upon completion of the implementation process of the measure. Subscribers, as always, will be able to sell all or part of the security before its maturity, without constraints and at market conditions.
The placement will take place on MOT platform (the electronic market for bonds and government securities of the Italian Stock Exchange) through two dealer banks: Intesa Sanpaolo SpA and UniCredit SpA. The new issue of BTP Valore is part of a new propensity to issue government debt securities with Italian savers and investors. Last Monday, April 29, the Treasury auction offered BTPs and CCTeus for a total of 10.25 billion.
In detail, Via XX Settembre offered the five-year BTP 1/7/2029, in the fifth tranche, for an amount expected in the ‘range’ of 2.75-3.25 billion; the ten-year BTP 1/7/2034, in the fifth tranche, for a range of 3-3.5 billion and the CCTeu expiring 15/4/2032, in the first tranche, for an amount between 3 and 3.5 billion.
