The new issuance of the five-year Btp Italia is surpassing by a wide margin that took place for the same type of government bond last November. On the first day, funding reached 3.62 billion, while another 2.93 billion in bonds issued to retail investors were added on Tuesday, March 7, and in November, the first day had closed with a 3.184 billion placement and the second at 2.24 billion. Issuance to small savers will continue on Wednesday, March 8, while on the 9th, it will be the turn of institutional investors.
The characteristics of the Btp Italia (attracting more than ever).
The Btp Italia provides a minimum coupon of 2 percent, plus a cost-of-living adjustment calculated based on the Foi index, every six months. In addition, the principal is also revalued based on the same index. The latter is the main advantage offered by Btp Italia, as it guarantees that, regardless of inflation trends, a return will be provided in real terms: even if prices continue to rise sharply in the coming years.
It is precisely the future inflation trend that will determine whether the yield of the Btp Italia will outperform that of the non-indexed government bond of the same maturity. Beyond the more opportunistic considerations, Italians have appreciated the security offered by indexing at a time when prices have shown that they can erode a large portion of purchasing power. As we pointed out earlier, however, it is future inflation and not past inflation that determines the final yield of the Btp Italia.
Compared to the two issues in 2022, which had bond maturities of eight and six years, the Btp Italia currently being issued has been reduced to five years. Meanwhile, the minimum guaranteed coupon increased from 1.6 percent last November to 2 percent. The standard five-year non-indexed Btp offers a yield of just over 4 percent but without offering capital and coupon revaluation to the cost of living.
The Btp Italia also provides an additional yield of 0.8 percent for those who purchased it in the primary issue and held it in their portfolio until its maturity in March 2028.
How to invest in the Btp Italia
The Isin code for purchasing the bond is IT0005532715. The order can be placed at post offices, bank branches, or through home banks enabled for securities trading. There is no charge to the investor for placement to customers (as is the case with all Btp bonds), while the state offers banks a small distribution service fee of 0.5 percent.
Taxation of the yield produced by the Btp Italia, as with other government bonds, is at 12.5 percent (compared with 26 percent for other financial products such as funds, corporate bonds, and stocks).
