“New Government Bond for Small Savers: Btp Valore – How It Works and Expected Interest Rates”

The Treasury announced the Frfirst issue of Btp Valorea new type of government bond, reserved for small savers, which will take place exclusively from 5 to 9 June 2023. These bonds will be sold at par, without commissions, and loyalty bonuses will also be offered to investors who decide not to transfer them before the expiry of their period of validity, set at four years.

To incentivize long-term investors, the coupons will be structured to increase progressively over time, through two or three steps. The minimum cut will be one thousand euros, and the minimum guaranteed rates will be communicated on June 1st. Let’s see in detail:

• Btp Value: functioning of new savings tool

• Considerations and prospects Btp Valore

Btp Value: functioning of new savings tool

The Ministry of Economy has announced the launch of a new issue of government bonds, called Btp Valore, which will be aimed exclusively at individual savers and similar, known as the retail market. There subscription of securities it will take place without allotment and without commissions, and there will be a loyalty bonus and periodic coupons at fixed and increasing rates. The Btp Valore will have a duration of four years and its initial value should be around 3.58%, even if it is not yet clear what the size of the coupons will be.

Unlike the Btp Italy, indexed to national inflation, the Btp Valore offer a very convenient mechanism, aimed exclusively at the retail market. It will be possible to subscribe to the security with a minimum investment of one thousand euros, through your contact person at the bank, the post office or through home banking enabled for online trading.

The preferential taxation for government bonds equal to 12.5% will also be applied for the Btp Valore, and the coupons and the loyalty bonus will be exempt from inheritance taxes. As with other government bonds, it will be possible to sell all or part of the bond before maturity.

Il placement of Btp Valore it will take place through the Mot platform, the electronic market for bonds and government securities of Borsa Italiana, with Intesa Sanpaolo and Unicredit as dealers. All official information, such as the FAQs, the information sheet and the technical note for operators, will be available on the MEF website and on the Treasury Department website in the Public Debt section.

What interest rates interest for Btp Valore

And crucial aspect to consider is the need for the first coupon offered by the new bond to be higher than that offered by the 4-year reference bond, in order to make it attractive to investors. This is an important step in a period of high inflation, where low coupons become even less attractive, even if followed by higher coupons in subsequent years. In the case of the December 2027 BTP, the offer of a yield of 2.65% on a price slightly above 96 cents produces an effective gross rate of 2.75% (2.65/0.96).

Assuming that the coupons of the new bond rise at the same rate of 0.25% per annum, the following situation would arise: a coupon of 3.20% for the first year, 3.45% for the second, 3.70% for the third and by 3.95% for the quarter.

In this case, the average annual gross return of the issue would be 3.575%. To which is added a loyalty bonus which, given the duration of the issue, will hardly exceed 0.50% of the nominal capital subscribed. In total, the overall maximum gross return would be 3.70%. In any case, we specify that market conditions may change in the coming months, also on the basis of the decisions of the European Central Bank on rates.

Considerations and prospects Btp Valore

The Meloni government, through the Ministry of the Economy, has therefore announced theissue of a new family of government bondsdenominated Btp Valore, intended mainly for small Italian investors.

The executive’s strategic objective is to increase the share of government bonds in the hands of Italian citizens, in order to make public debt more solid and less vulnerable to external pressures. The reference model it is the Japanese one, in which the public debt is mainly held by national creditors, with the aim of protecting the interests of the country.

The new title, which will have a d4 year duration, can be subscribed without distribution, with a loyalty bonus and periodic coupons at fixed and increasing rates. The Mef underlined that the Btp Valore will be easy to subscribe and without commissions. At the moment, the details on the coupons are not yet known, but the initial value should be around 3.58%. The Btp Valore has some similar characteristics, but with specific differences, compared to instruments already on the market.

L’issue of Btp Valore will be dedicated exclusively to individual savers and similar, in the retail market, starting from a minimum investment of one thousand euros. The securities can be subscribed by contacting your contact person at the bank or post office where you have a securities account or through your home banking, if enabled for online trading functions.

All the official communications on the new Btp Valorethe FAQs, the information sheet and the technical note for operators will be made available on the MEF website and on the Treasury Department website in the Public Debt section.