The Btp Italia start with a bang. Multi-year treasury bill, what you need to know

First day for the new BTP Italy with a boom in orders from small Italian savers looking for attractive returns. The sixteenth issue of Btp Italia is characterized by some important innovations starting from the fact that for the first time it has a specific destination, namely the financing of interventions relating to the Covid-19 emergency.

On the first day orders were collected for over 4 billion euros (to be exact 4.02), a very high figure considering that in the last issue of last October in the three days for retail less than three billion were collected in total (2.987 billion). The new BTP Italy will have a guaranteed minimum coupon rate of 1.4%, with the definitive rate that will be established at the opening of the fourth day of issue, on the morning of Thursday 21 May. The issue presents the 5-year maturity (26 May 2025) as an important novelty and for those who sign the title at this stage and hold it until maturity, therefore, for the entire duration of the 5 years, a double loyalty bonus is provided compared to previous issues, equal to 8 x thousand of the invested capital. This is due to the special destination of this sixteenth issue of the BTP Italy which will be entirely intended to finance the recent government measures to deal with the Covid-19 emergency.

The day before the issue, the Minister of Economy Roberto Gualtieri said that with the BTP Italy “on the one hand Italian savers protect themselves from inflation by seeing the remuneration of their investments increased, on the other the overall structure of the Italian debt it benefits from an increase in inflation »therefore« higher growth and a little inflation would be good for the public accounts and subscribers of the Btp Italia ».

The effect of the first euphoric day on the stock markets contributed to a substantial drop in the BTP-Bund spread to 222 basis points, or 20 basis points less than Friday’s levels. The 10-year BTP rate has fallen to 1.75%. The good performance of the BTP auction comes on the day Goldman Sachs issues a heavy forecast on the Italian economy, or a drop in GDP for 2020 that could reach 14%. It is the worst scenario expected to date.

The fact that the auction went well on the first day is also read politically, with Matteo Salvini writing on social media: “You see we were right? Other than Mes or other cheats, which not even Greece and Spain will use, we trust the Italians and we will not regret it! ». The leader of the League has long indicated the path of treasury bonds as a good solution to finance the crisis. And, in the same way, he believes the activation of the Mes, the States-saving fund, which he says would not really guarantee the absence of “conditionality”, is counterproductive. The Mes game is still open. The Democratic Party pushes to make use of it. While Prime Minister Giuseppe Conte still remains undecided. This is a very divisive theme, so much so that even the center-right does not have a shared vision. If Giorgia Meloni agrees with Salvini, instead she pushes Forza Italia to activate the credit line. According to Antonio Tajani, “the EU has been late, but the ECB has done well, with 1,100 billion quantitative easing, just as the money for the SIG cig and the money from the European infrastructure investment bank are good”. As for the Mes, “they are 36-37 billion, zero interest rate, repayment time ten years, not using them on a political whim doesn’t make sense. We absolutely must use them, especially for the southern regions for healthcare facilities if there was a new wave of the virus in November or December ».