These securities can offer attractive yields above 3%.
The BTP Italia, due to its various coupon maturities, has its own base inflation index
Between BTP auctions and special issuances like the BTP Italia (nineteenth edition), there is always significant interest in our country’s debt. But what’s enticing in the market? Currently, experts are looking at short-term maturities, which still offer compelling yields above 3%, but they caution against the risks and uncertainties related to inflation and economic growth.
Understanding where to invest is crucial, just as determining whether our investment goal is liquidity, inflation protection, coupon income, or yield at maturity. These priorities guide a financial advisor in selecting issuances tailored to our portfolio.
Upcoming Events
So, what are the upcoming events from now until year-end? The BTP auction calendar for August 2023 has undergone significant changes. In a communication issued by the Ministry of Economy and Finance (MEF) on July 24, the cancellation of two auctions was decided. Therefore, in August, there will only be one BTP auction: on August 30, for medium and long-term bonds.
As for the autumn calendar, here are the dates to consider:
September
September 12: BOT Auction
September 13: Medium-Long Term Auction
September 26: BTP Short – BTP€i Auction
September 27: BOT Auction
September 29: Medium-Long Term Auction
October
October 11: BOT Auction
October 12: Medium-Long Term Auction
October 25: BTP Short – BTP€i Auction
October 26: BOT Auction
October 31: Medium-Long Term Auction
November
November 9: BOT Auction
November 10: Medium-Long Term Auction
November 24: BTP Short – BTP€i Auction
November 28: BOT Auction
November 29: Medium-Long Term Auction
December
December 12: BOT Auction
December 13: Medium-Long Term Auction
December 27: BOT – BTP Short Auction
December 28: Medium-Long Term Auction
Long or Short? It Depends on the Security
If we choose to bet on BTPs, analysts recommend a long-term perspective.
What about BTP Italia? This ultra-protective buy-and-hold security has been a reliable choice over the past year. For this security, it’s best to go short and gradually switch from one maturity to the next, provided that inflation trends make it advantageous. It’s worth noting that each BTP Italia, due to its various coupon maturities, has its own base inflation index, resulting in different indexation coefficients for each security.
An alternative to immediately investing 100% in BTPs is to divide the long-term portion, specifically the BTP 2040, into three portions: the first at the current price and the other two in case of possible further price declines. This can serve as a long-term protective tool. On the other hand, BTP€i offers a fixed interest rate while still accumulating inflation on the principal.
At Maturity and Before
For an investor who has purchased BTPs with the intention of holding them until maturity, the only tangible risk is credit risk (or issuer risk), which occurs when the Treasury defaults on coupon payments or capital repayment. This is a very rare scenario.
However, those who have invested in BTPs with the intention of selling them before maturity may also encounter market risk. Upswings in yields could cause the BTP’s price to fall below its auction or secondary market purchase price, resulting in a loss for the investor.
