Italians continue to subscribe the BTP Valore created by the Meloni government, albeit with less enthusiasm than previous editions.
Yesterday the Mef announced the details of the fourth placement of BTP Valorewhich the Mef-Tesoro issued on the MOT of the Italian Stock Exchange starting from last Monday 6 May, until Friday 10 May.
Via XX Settembre had already communicated the outcome of the issue last Friday: more than 11 billion euros the sum raised from the state coffers.
Also disclosed the definitive coupon rates of this new state title expiring in 6 years, in May 2030, which had confirmed the minimum guaranteed ones announced shortly before the start of the issue:
equal to 3.35% for the first, second and third year, and 3.90% for the fourth, fifth, sixth year.
BTP Valore, IV act Meloni: average contract size of approximately 29,000 euros
Yesterday the Ministry of Economy and Finance communicated the details of the fourth placement of the BTP Valore, known as a government bond aimed exclusively at retail investors, specifying that the amount issued was equal to 11,226.556 million euros against 384,295 contracts concluded, with an average denomination of 29,213 euros.
The Mef has published the table which summarized the value of the subscriptions and the number of contracts relating to each of the five placement days specifying that, of the 384,295 contracts concluded on the MOT (the Telematic Market of Government Bonds and Securities of the Italian Stock Exchange) approximately 66.4% were for amounts less than 20,000 euros, while if contracts up to 50,000 euros are considered, the incidence was approximately 90.7 percent of the total.
The Treasury also announced that, from the information collected from Dealers, Co-Dealers and other intermediaries, it emerged a participation of retail investors significantly prevalent compared to that of private bankingwith a share of 72 percent.
Finally, within the quota subscribed by retail investors, approximately 55 percent forwarded the order through branches of banking networks and post offices (either by physically going to the branch or remotely), while the remaining 45 percent through home banking.
Regarding the geographical distribution of orders received, almost all of the orders came from domestic investors, i.e. from Italian savers or even BTP People, as Italian retail investors who have decided to respond to the Prime Minister’s appeal to channel savings towards Italy’s maxi public debt are now generally called.
The table below, published on the Mef website, lists the number of contracts and the value of the requests of this fourth edition of the BTP Valore
To understand how this fourth issue of the BTP Valore went, it is worth recapitulating the trend of the previous three editions, starting from the “first” of this state title, which made its official entry in June 2023.
The first BTP Value had a maturity of 4 years, fixed returns increasing over time (the so-called step-up mechanism) – a characteristic that has continued to characterize this category of Italian government bonds – and a final extra loyalty bonus equal to 0.5% calculated on the invested capital, with ISIN code during the placement period of IT0005547390.
That first edition of June 2023 somehow gave shape to the dream of Autarkic BTPas had been particularly anticipated by the newspaper The Republicon which according to press rumors the Meloni government had started working immediately after its inauguration, in October 2022. At the beginning of 2023, it had been the same Prime Minister Giorgia Meloni to launch the appeal “more government bonds for Italians” .
The BTP Valore thus made its official debut, presented by the Mef-Ministry of Economy and Finance as a “new family of government bonds reserved for small savers (retail market)”which could have been signed “at the bank, at the post office, wherever you have a securities account, but also online through your home banking”.
The official minimum rates, later confirmed, they were at 3.25% for the 1st and 2nd year and at 4.00% for the 3rd and 4th year.
Growing over timethe rates were structured according to a “2+2” logic with a fixed rate for the first two years of the security’s life and another, higher fixed rate for the remaining 2 years, until maturity.
In everything 54,675 contracts would have been signed, with an average cut of 27,786 eurosin the placement period which started on 5 June and ended on 9 June 2023, for a value exceeding 18 billion euros.
Regarding the geographical distribution of orders received, almost all of the orders came from domestic investors (around 99 percent), that is, by small Italian savers, who had responded with great euphoria to the appeal launched by Prime Minister Meloni. The Treasury would thus return to office a few months later, in the autumn of 2023.
The second edition of the BTP Valore, a source of pride for the Meloni government
The second edition of the BTP Valore started from 2 to 6 October 2023: the new government bond aimed at individual and similar savers this time had a duration of 5 years and an extra final loyalty bonus equal to 0.5% of the invested capital.
With ISIN code IT0005565392the BTP value offered minimum guaranteed coupon rates which would be confirmed with the announcement of the definitive rates at the end of the placement.
The proposed rates were even at 4.10% for the 1st, 2nd and 3rd year and at 4.50% for the 4th and 5th year.
The success of the BTP Valore was an encore: the issue concluded with requests for 17,190.004 million euros, therefore over 17 billion, against 641,881 contracts concluded, with an average cut of 26,781 euros.
Also in this case, almost all orders came from domestic investors.
Prime Minister Meloni proudly flaunted the results, especially to those who had pointed out in those days the pessimism of the financial markets towards Italy, due to a Nadef (Update note to the Def) drawn up by his executive which, with a not at all reassuring outlook on the deficit-GDP ratio, had made investors jump to attention, in view, among other things, of the highly anticipated announcements on the rating of Italian public debt.
Those judgments would come without causing those shocks which had been so feared by Italy.
It would especially be the big news of the no Moody’s junk rating for BTPs to deny the worst concerns about the fate of the country, to the delight of the Prime Minister, who praised not only the BTP Valore but also the decline in the BTP-Bund spread.
Meloni thus made a crucial decision, which would provoke several discussions:
in order to promote the saving role of BTP People, the government announced that Italian government bonds would be excluded, with the 2024 budget law, from the ISEE calculation.
Clear the intent of Meloni & Co. to resolve the anguish of Italy’s public debt, abandoned among other things by the ECB which had caused QE-Quantitative easing to be retired, trying to draw on Italy’s savings in every way.
Third act Meloni: the cruise title arrives. The all-time record
At the end of January this year, the Italian government went further by announcing the third edition, or the first act of 2024 of the BTP Valore.
The new BTP Valore took the form of a government bond with“a duration of six years, coupons paid every three months with pre-established and increasing returns over time based on a 3+3 year ‘step up’ mechanism, and an extra final loyalty bonus of 0.7 percent.
The third edition of this new government title dedicated to retail, with code ISIN IT0005583478, was launched on Monday 26 February, to continue until to Friday 1 March, presenting the following rates:
3.25% for the first, second and third year; at 4% for the fourth, fifth and sixth years.
That would have been the Treasury’s all-time record issue: 18,316.424 million euros were raised, or more than 18.3 billion euros.
Absolute record not only in terms of subscribed value, but also by number of registered contracts: 656,369in a single placement of government bonds for small savers.
Meloni’s umpteenth big gamble was welcomed with a boom in orders, but also with a boom in criticism, both because that new BTP value had been presented by the government essentially as a title to go on a cruise and because, at least in the first stages of the new issue, it was not yet clear what the legislation was in relation to the calculation of the ISEE, given the bombshell announcement from INPS dropped at the beginning of 2024.
The Treasury clarified, underlining that Meloni’s promise was in any case armored.
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Various statements were made by Prime Minister Meloni in those days, accompanying the resounding success of the BTP value. “To invest well” said the Prime Minister, while in just two days orders flew beyond the 11 billion threshold, practically at the same level as the fourth and final edition, which has just ended.
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The special issue of the BTP Valore
Last Monday, May 6th, BTP Valore made its grand return with an edition that was immediately defined as special, as it was launched, according to the Minister of Economy and Finance Giancarlo Giorgetti, to meet the requests of those BTP People who had not had the opportunity to participate in the previous issue, placed at the end of January.
With lower minimum coupon rates, then confirmed at the end of the issue, and a richer loyalty reward,
the return of the BTP Valore confirmed the Meloni government’s new appeal to the audiencethe BTP People to continue to take the place of the ECB’s QE-Quantitative easing, gone in the attic for a while.
With code ISIN IT0005594491 the new government bond dedicated exclusively to retail investors, with a 6-year maturity, was characterized by annual coupon rates, then confirmed at the closing of the placement, equal to 3.35% for the 1st, 2nd and 3rd year and 3.90% for the 4th, 5th and 6th year.
It was immediately clear that retail investors wanted this government bond it would have been quite weak.
The numbers remain decent, given the amount raised exceeded 11 billion euros. But the figure pales if we consider that each of the previous editions had allowed the Treasury to collect, on average, 18 billion euros, so much so that someone didn’t think twice about expressing some doubts about the debt nationalization strategy launched by Prime Minister Meloni, while someone else also warned about the risk that weaker demand for BTP Valore could have on Italian paper in general. Having said that, including the outcome of this edition, it emerges that Meloni’s plan allowed the state to cash in something like 65 billion euros from small savers.
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