After placing 2.28 billion euros yesterday for 50 thousand contracts, today the new BTP Futura has yet to warm up the engines. Early in the morning, the mandatory 16-year issue of the State, expiring in 2037, started with 51 million euros in requests from the market. The operation will close on Friday.
According to Davide Zanichelli, of the 5 Star Movement, “it is a good opportunity for the country with the spread of 100. However, this last issue already sees the highest share of commissions to be paid to intermediaries, 0.95%, when only two years ago they were 0.4%, less than half “. The deputy adds that “an increase in commissions to banks generates many perplexities for the tens of millions of euros that the state will have to pay more to institutions than past issues”.
In the BTP Italy of October 2019, Zanichelli calculates, the commissions were “3.5 per thousand for intermediaries and 0.5 per thousand for dealers. In April 2021, costs jumped to 9 per thousand for intermediaries. and always 0.5 for dealers “. As for the stamps, given the low yields already reduced by the capital gain, for the politician grillino “a free range of stamps would be needed for small retail savers who have only Italian government bonds in their deposit, below a certain threshold”. For example, as current accounts under € 5,000 are exempt from stamp duty, “in the same way, it could be arranged that for deposits under € 20,000 containing only government bonds, stamps are not paid”, adds Zanichelli.
Giacomo Alessi, an analyst at Marzotto Sim, recalls instead that in parallel with the approval of the 2021 Economics and Finance Document, the Mef has started the placement of the third Futura BTP. The bond can be purchased during the placement phase only by a retail audience and will have a step-up mechanism with fixed coupon rates gradually increasing over the 16 years (maturity 27/04/2037) of the bond’s life. The coupons, communicated last Friday, are 0.75% for the first 4 years, 1.2% for the second 4 years, 1.65% for the next 4 years and 2% for the last 4 years of the bond’s life. .
The coupons will be paid every six months. The average return, excluding the first loyalties, is 1.4% per annum. Alessi explains that “the double loyalty premium is the peculiarity of this third Futura issue, since after the first eight years of the bond’s life, an extra fee will be paid to holders who purchased in the issue phase equal to 40% of the average GDP growth. Italian over the 8 years of survey with a base, a floor, of 0.4% and a limit, a cap of 1.2%. ”
Upon maturity of the security, two loyalty bonuses will be paid, the first always relating to the initial eight years of life and will be equal to 60% of the average growth of Italian GDP over the eight years of Istat survey and will have a floor of 0.6% and a cap at 1.8%, while for the last eight years of the bond’s life an extra coupon will be paid equal to the average annual GDP growth over the eight years of survey with a floor at 1% and a cap at 3 %.
The investor who buys the bond this week and brings it to maturity will therefore have a variable extra-coupon with a minimum of 2% and a maximum set at 6%. Unlike the first two BTP Futura issues, adds Alessi, “the loyalty premiums of this new title will start with rather encouraging data, because in the next two years an average growth of more than 4% is expected and for the next two a GDP is expected in
growth of over 2% “.
In summary, the new BTP Futura, even without premiums, offers a higher yield than the fixed-rate bond of the same maturity, which Alessi has calculated to be around 17 basis points (1.4% -1.23%) compared to the BTP curve. . The performance premium rises if we consider the loyalty premiums and stands at around 30 basis points by calculating the minimum premium (1.525% -1.23%) and 55 basis points (1.775% -1.23%) by calculating the maximum premium.
“The investor, on the other hand, would be damaged if at the first loyalty premium he had to sell the stock with a negative yield premium of about 20 basis points with first prize loyal to the floor (1.03% -1.23%) and 10 basis points with first prize faithful to the cap (1.13% -1.23%) “, calculates Alessi. The step-up mechanism in this case “greatly damages the investors who do not bring the security to maturity since the first coupons are much lower
than the last”.
Marzotto Sim recommends subscribing to the new BTP for investors who can see in this new issue a potential security on which to turn their investments in traditional securities and who are not afraid of the long maturity in a period of rise in long-term interest rates. In addition to the financial impact, there is also a social impact as the funds raised will be invested in the vaccination campaign. Alessi, on the other hand, does not recommend subscriptions for those who want to “capture a profit in the short term thanks to a performance on the secondary market. Anyone who thinks of a short-term rate restriction should aim for a fixed rate of the same maturity”. (All rights reserved)
