Only tomorrow Friday 6 November the treasure will make official the interest rates linked to the new BTP Futura. Which will be subscribed within the next week and will be reserved for the retail market only, ie the individual citizen-saver.
We had a first version of this BTP already in early July, when subscriptions for about 6 billion euros were collected.
The summer issue was of the ten-year type (the next one foresees a duration of eight years) whose coupon structure provided for step-up interests. That is, three bands of yields to rise, and with a loyalty bonus reserved only for “loyal” bondholders, that is, who will not liquidate before maturity.
Faced with the new issue, he asks us what to do. A doubt that involves both those who joined the first issue as much as those who already decided to stay out of it.
As always, one of the criteria on which to set the choice will be the future rates. Now, will the Futura BTP offer more attractive interest rates than the first BTP issue in July? Let’s proceed in order.
Will the interest rates of the BTP Futura be more attractive?
Until tomorrow, all that can be said pertains to the world of conjecture and supposition, and nothing more. However, there are some elements in front of which some reflection can be made right now. In particular:
a) the general economic situation has not improved since the summer, on the contrary. At the same time, optimism about the rocket recovery in GDP for the coming year has cooled. What does this have to do with the performance of the BTP?
The link is due to the loyalty bonus: it is in fact linked to the average GDP trend over the eight-year life of the product. Well, the first of these years, 2021 in fact, would already seem less rosy than expected.
Of course, one could refute this and think of recovering everything in the next seven years. It would be legitimate and very possible, but at least for now it seems an exercise in excessive optimism, as well as definitely premature;
b) the strong climate of confidence in ECB support on the secondary market has led interest rates to fall from July to today, and not the other way around.
Today, in fact, bonds up to four years of maturity have negative or zero returns. While on maturities of eight years the yield is about 0.50%.
The elements that will be evaluated
c) Finally, it should be noted that the new BTP will have a shorter duration (eight years) than the twin already issued in July, which was ten years. So why expect more?
Such a scenario (ie the new rates higher than the old ones) could open the side to switch-type valuations. In other words, liquidate the instrument purchased in July and take home a good 2% gross already.
On the secondary market, in fact, today it trades at around 102.7, which translated would be around a good 2% net. Even commissions to your bank, which vary from institution to institution.
This would be a good return if you consider that only four months have passed since the launch of the BTP. Especially when compared to the 1.15% gross yield offered by the same BTP Futura but after one year (and for the first four) from the purchase.
Therefore, if the BTP Futura will offer more attractive interest rates than the first issue of the BTP in July, we will know for sure only tomorrow.
Finally in this article the next three bond issues of the Treasury are shown.
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