The eleventh BTP Italia bond placement proved to be perfectly in line with market expectations. Yesterday the sale reserved for institutional investors closed, bringing in €5.4 billion in takings for the Treasury: a figure that, added to the €3.2 billion gathered through the offer reserved for retail investors, brings the total to €8.6 billion.
Also in this case, therefore, the tools that the Treasury has employed for three years to avoid a return to the huge issues of BTP Italia between 2012 and 2014, with sums of more than €22 billion, proved effective. Faced with total demand of more than €7 billion, the Treasury decided to accept little more than 76% of the subscription requests that arrived from institutional investors, issuing €5.4 billion. Despite the “cut,” the final share in the portfolio of institutional investors was significantly higher compared to that bought by retail, reaching 63% of the total.
One issue here is worth underlining. With 37% of this issue, the percentage bought by retail investors has fallen to the minimum for this type of state bond, and to find a retail participation that is roughly as low you need to go back to the third issue of the BTP (in October 2012) in which the retail share was stuck at 38%.
From then on, small savers have always proven to be keen on the BTP Italia, reaching subscription levels on some occasions that were well over 50% of the total issued: in the case of the seventh issue in October 2014, the percentage was over 60%. From that moment, nevertheless, a slow decline has started which has increasingly distanced the retail sector from the BTP Italia.
Small savers’ purchases have fallen constantly, declining firstly to 57% of the total amount, then 54%, 42.5% at the tenth issue, up to the 37% of this most recent issue. Overall the issues over the last years seem to confirm that the BTP Italia, a bond created in 2012 with the main aim of bringing retail investors closer to Italian government bonds, is becoming an instrument that is increasingly less favored by small savers.
The reasons? Certainly the reduction in the guaranteed earnings of the BTP Italia has played a role.
Between 2012 and 2013, the minimum rate guaranteed to the buyer was firmly above 2% (you can think of the 2.55% of the BTP Italia issued in October 2012) while now it is ranging between 0.35% and 0.45%. In the same way, it is also true that very high percentages of subscription from retail investors were registered in 2015, when the minimum rate was 0.50%. A certain saturation effect is also weighing, as noted by some traders, seeing as we have reached the eleventh issue. The BTP Italia is amply present in the retail portfolio.
This last factor is not exactly comforting considering that in 2017, two BTP Italia issued in 2013 are due to expire, which were such a success that the first two issues in April and November reached a total value equal to just under €40 billion.
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