“Btp Valore”, the persecution of savers begins. Trust the Treasury

The first day of issuing BTP Valore with a quarterly coupon was a success. The bond, built specifically to attract small savers to buy state debt, was subscribed for almost five billion euros. A test of Italians’ trust in the Treasury. Which has almost 3 trillion in bills to pay in its budget. A frightening burden, but one that did not discourage the Bot people (that’s what those who invested in the Economy’s financial card in the 1980s were called) from requesting it. There are many reasons behind the market’s response. A first factor rewards the trust that citizens place in the paying State. Anyone who invests money, whoever they are, must respect a basic rule: try never to lose. Therefore, continuing to bet on government bonds means that regardless of the government’s often instrumental and anti-center-right alarms about imminent state bankruptcy and spreads at stellar levels, BTPs are still considered a safe haven . In the saver’s mind, the positive mantra is that, for now, until September 20th, he will honor his commitments. This has happened regularly in recent years, despite global financial crises, such as the subprime crisis, the collapse of Lehman Brothers and the markets’ attack on the spread in 2011.

Even with Meloni, coupons and refunds are taken for granted. A feeling also corroborated by economic data. Although the ECB led by Lagarde has begun a destructive process of the real economy, the data is still promising. As was the case with unemployment in August, which fell to levels never so low in 14 years. However, the attractiveness of the proposed financial solution is also determined by other factors. The first is the guaranteed rate for the expected five years. Anyone who keeps BTP in their portfolio until the end obtains, in addition to the annual fee, an extra loyalty bonus set at 0.5%. According to last Friday’s prices, the BTP for the same maturity was quoted at 4.21%. The BTP Valore, considering the bonus, is 4.36% (without it it stops at 4.26%). A few more points, therefore, in relation to normal auctions, but after years of zero interest and with inflation still hovering around 5% per year, for those who have money tied up in the bank, the bond represents an enviable solution to maintain purchasing power. At the time. Yes, because if you do, it could also become an excellent business if, as expected, the cost of living decreases. If the ECB president came to her senses and started lowering the cost of money, there would be a decrease in market rates and a capital gain on the value of the BTP. The rule is that if average returns fall, the capital invested in government securities automatically increases. So if it is sold, you earn a margin greater than the purchase price.

Technical reason perhaps most considered by institutional investors who will not fail to put shares of this BTP in their belly with the idea of ​​not necessarily taking it to maturity. The novelty of quarterly coupons is much clearer and more attractive, which allows you to receive cash flows more frequently, as interest will be paid every three months and not every six as is traditional. For now, the Treasury’s choice is also a winner because Italians still have a lot of liquidity in their accounts and banks have not adjusted customer remuneration to the increase in ECB rates. So everyone wins. Firstly, the Treasury, which despite spending a little more, guarantees a pre-established duration of the loan. Most savers will hold the bond until the end and this reduces spread volatility in the secondary market. Where BTPs are sold ahead of schedule. There is only one critical issue that operators in the venture capital markets fear. If a lot of money arrives to finance state expenses, there will be less to finance the real economy.

Source: IL Tempo

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