BTP ITALIA: a special issue in support of healthcare and economic recovery

May 26, 2020

Government debt management is being updated to cope with the Covid-19 emergency.

As announced in the new Guidelines for public debt management 2020, published on 14 April, several actions will be implemented to finance the measures taken by the Government to face with the health and economic emergency caused by the ongoing epidemic.

Although many new elements will relate to the auctions and placements reserved for Specialists in Government Securities, an important role has been reserved for the retail market, which is to say all Italian citizens who wish – also through their own investment management – to contribute to healthcare expenses and to support labour as well as the relaunching of the economy.

Today, according to data supplied by the Bank of Italy, the share of total outstanding government securities that has been subscribed directly by retail investors currently equals 3% - a very low level even in comparison with the recent past.

BTP Italia, Covid-19 emergency issue – An investment that supports us

The new issue of the BTP Italia, placed from the 18^th to 21^th of May 2020, is the sixteenth in the history of this bond, and is earmarked entirely to finance Covid-19 emergency expenses.

What is the BTP Italia?

The BTP Italia is a Government Security indexed to Italian inflation and conceived to protect savings from rising prices.

In the various issues, its term was from 4 to 8 years, with coupons paid semi-annually and principal always guaranteed upon maturity, even in the event of deflation. For this issue, the term was set at 5 years.

What’s new about this sixteenth issue?

The new BTP Italia issue is wholly earmarked to finance Covid-19 emergency expenses, the measures for Italy’s economic recovery and support for families and businesses.
For the first time, a 5-year maturity is planned.
The “loyalty bonus” was doubled to 0.8% of the principal. As always, the bonus is reserved only for private investors or those who purchase the bond on 18, 19, or 20 May and hold it until maturity.
With the goal of promoting maximum participation and easing the work of financial intermediaries during this particular period, for the first time there was no faculty of early closing, thus leaving three whole days for retail investors to subscribe: from the 18^th to the 20^th of May 2020.

Otherwise, the bond confirms its characteristics.

Annual real rate of interest indexed to the domestic inflation rate
Floor protecting the invested principal in the event of deflation
Semi-annual coupons
Principal always guaranteed at maturity
Preferential 12.5% capital gain tax, as for all government securities
No commission for those who purchase it on the placement dates
Full allotment for retail investors, which is to say the entire demand originating from small investors will be met. The minimum lot is € 1,000

What are the returns expected for those who subscribe this BTP Italia issue?

Return varies for each issue: the minimum annual (real) coupon rate guaranteed by the sixteenth issue of the BTP Italia, launched Monday, 18 of May, is set at 1.40%. The final rate has been confirmed at 1.40%.

Coupons will always be paid every 6 months.

The final return for this sixteenth issue of the BTP Italia will be provided by the rate set on 21 May, revalued, or with the addition of the domestic inflation rate recorded for every six months during the bond’s 5-year term. The inflation rate of reference is FOI (Index ex-tobacco, Indices of Consumer Prices for blue and white-collar households with the exclusion of tobacco).

How can the BTP Italia be subscribed?

In addition to the bank or post office where a securities account is held, this bond can also be subscribed directly online, via home-banking if the online trading function is enabled, without having to visit the bank branch or post office. Given the emergency currently taking place, this opportunity, which has always been a characteristic of the BTP Italia, has been particularly useful.

The BTP Italia is in fact placed not via the usual auctions, but via the MOT (Mercato Obbligazionario Telematico, the electronic secondary market managed by Borsa Italiana), with the support of four Dealers: Banca Imi Spa, Bnp Paribas, Monte dei Paschi di Siena Capital Services Banca per le Imprese Spa, and Unicredit Spa.

The placement is organized in two phases dedicated to two types of potential subscribers.

The First Phase took place in three days, from the 18^th to the 20^th of May 2020, and, as usual, has been dedicated to individual investors and other persons similarly classified (retail market), with no restrictions or caps on the issue.
The ISIN code of the First Phase bond is IT0005410904. For the Second Phase dedicated to institutional investors, the bond’s ISIN code is IT0005410912.

The Second Phase, which took place Thursday, 21 of May, has been dedicated to institutional investors for which placement may involve an allotment, if the total amount of received orders exceeds the final offer established by the Ministry of Economy and Finance.

All the details on the upcoming BTP Italia bond issue are published in the Bond Term Sheet.

The results: record placement closed at above 22 billion

The amount placed has been equal to 22,297.606, the biggest ever issued for BTP Italia. In particular, during the First Phase of the placement (dedicated to retail investors), from the 18^th to the 20^th of May 2020, the number of contracts concluded has been 383,966 for a turnover of 13,997.606 million Euros. During the Second Phase of the placement (dedicated to institutional investors), the number of purchase proposals collected and executed has been 746 for an issued volume of 8,300.000 million Euros against a total demand of 19,546.876 million Euros (allotment coefficient of about 42.5 percent).

Official announcements of the BTP Italia – Issue of May 2020

Contacts

Additional information may be requested at: dt.gruppo.info@mef.gov.it

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