BTp Valore: final hours for purchases. Final rates to be announced today

Stormy winds are causing turmoil in the markets, but not amongst Italian savers. They are calmly continuing to buy the two Valore BTPs, which are on issue until lunchtime today.

On a Thursday marked by across-the-board sell-offs, from share markets to French government bonds, government bonds reserved for retail investors, however, set an all-time record for a fourth day of placement, totalling 2.81 billion in purchases spread across 94,811 contracts. Yesterday’s figure therefore surpasses the previous record, which had been set on Thursday 5 October 2023 by the second of the ‘Valore’ BTp bonds, with 2.73 billion. The two twin bonds reserved for retail investors thus reach the final day’s finish line with proceeds of 14.9 billion, in line with their predecessors, which closed the placement week at an average of 16.09 billion.

The game is not yet over when it comes to yields either. In a period of extreme volatility, making predictions is risky. However, it is worth remembering that the rates announced last Friday – which show an annual yield of 4.1 per cent for both BTp Valore bonds – are the guaranteed minimums, and that the final rates will be announced today: either confirming the figures from seven days ago or revising them upwards: with no major changes, in any case. For the traditional BTp, the coupon is currently expected to be 3.7 per cent in the first two years, 4.1 per cent in the second two years, and 4.7 per cent in the fifth and final year of its term. The ‘BTp Valore Insieme’ concentrates its yield in the final 22.25 per cent. The final rates will depend entirely on how the markets open this morning. Last week, the minimum guaranteed yield assigned to the two BTp Valore bonds represented a small premium over ordinary five-year government bonds with the same maturity, which were trading at around 3.95 per cent.

By midday yesterday, that spread had been completely absorbed: with the result that, had the auction closed at that point, the Treasury would almost certainly have raised the rates on the two BTps to maintain that positive spread over ordinary bonds – a standard feature of offers aimed at savers and households. In the afternoon, some of the tension eased, reopening the possibility of all options. The decisive factor is, of course, the yields, not the spread: which soared by 9 basis points yesterday to 126.5, as a result of the global flight to German safe havens, which has pushed down the yield on the 10-year Bund by 8 basis points. At the end of the day, however, the Italian market remained largely unchanged from Wednesday, with limited fluctuations ranging from just under one point on the 30-year BTp to three points on the three-year bond, and even slightly negative movements at the shortest end of the yield curve.