there First BTP auction of the month scheduled Today is July 13, 2023 It will be more than rich. The Treasury has long been accustomed to very large issuance amounts but this time we are talking about double digit numbers. In fact, there will be up to €10 billion in securities on the table created by the MEF. A huge amount that can also be explained in light of the number of BTPs to be auctioned: 4! In short, it is a large, highly diversified auction that offers investors the opportunity to choose between different maturities.
And At a time when BTP revenue continues to rise(Thanks to the now confirmed new ECB rate hike on the July board), having as much choice as possible means being able to effectively choose the security that best suits your needs.
We were talking about 4 securities: 3 of them are new BTP chips that have already been released. But there is also a new government bond. Just a few weeks after publishing its Quarterly Release Program (Q3 2023), MEF immediately moved from words to action with a 3-year BTP setup. The new side will be up for auction tomorrow, July 13th.
At this point, curiosity could already be on the rise, and thus one might want to hear submission hypotheses. We will do this for each bond in the auction, but not before submitting the bond properties. As always, on the page about upcoming BTP auctions there are tabs with all the information.
The 3-year BTP auction is today, July 13, 2023
Let’s start with what will soon become a new entrant in the secondary market: 3-year BTP due September 15, 2026. The ISIN has not been set yet while the coupon amount is known: 3.85% per annum (divided into 2 since the split is every six months).
The bid amount is between 4 and 4.5 billion euros. The coupon is gross, so considering BTP taxes, it drops 12.5% to 3.37%. Given the current prices of the other 3-year notes in the secondary, it is also plausible that the new 3-year BTP price that expires in September 2023 will be slightly below average.
The parameter that must be considered to assess comfort is inflation. In the next three years, the average could be less than the net coupon of 3.37%. In this case, the bond will be particularly interesting for those with a short horizon of making their savings pay off.
Today’s BTP Auction July 13, 2023: 7-year and 15-year notes
An increase in duration, then there is BTP for 7 years and 15 years Maturity guarantee 15th June 2030 and coupon 3.70% SPECIFIED BY ISIN IT0005542797. In this case, to talk about expected returns, we have the reference in the secondary market where the securities in question are trading at around 97.80 cents with a total yield of 4.10%. Not bad, but be careful because it’s a seven year release, so 4 years longer than the new 3 year release.
The second is BTP maturity on March 1, 2038 and coupon 3.25% specified by ISIN IT0005496770. In the secondary, we’re down 86.50 cents with a yield of 4.6%. Not bad, but the expiration date is too late, and therefore not all investors can commit to liquidity until 2038. Frankly, this bond looks interesting to us for those who have a speculative approach, not savings, and therefore they are ready, if necessary, to sell before expiration validity.
Today’s BTP Auction July 13, 2023: The 30-year note
If a 15-year BTP plan is ideal for those who take a speculative approach, then a 30-year plan is even more so. The protagonist of placement is BTP expires on September 1, 2049 specified by ISIN IT0005363111 of which the 10th tranche was placed last month (on July 13th, we’ll be on the 12th instead). On the minor side, the security is priced at less than 90 cents, so the fixed yield is very strong at 4.6%. However, the duration is quite long which is why those who cannot commit to liquidity beyond a certain limit are better off looking elsewhere.
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