MNI INTERVIEW2: Italy To Sell More BTP Valore After Summer

Italy will launch at least one more new BTP Valore retail bond after the summer, though its characteristics may differ from those of the floating rate issuance set for June and announced on Monday, the Treasury’s Director General of Public Debt Davide Iacovoni told MNI.

“In the next issuances we cannot exclude that we will have different types of structure, that can also be built into external parameters. It could be more like a floating-rate than a fixed rate bond,” Iacovoni said in an interview, though he added that they would not be inflation-linked.

The first BTP Valore, to be put on sale from June 5-9, will have a duration of four years with a fixed rate which increases with time and a loyalty bonus for those who hold it to maturity.

“The number of issuances will depend to a degree on our cash position and demand,” Iacovoni said, noting that demand for June’s BTP Valore will feed into the calculations over further sales. (See MNI: Italy Seeks EUR9-11 Bln Savings Or Extra Revenue-Sources)

FOUR-YEAR DEMAND

A four-year maturity hits the market sweet spot, he said, with less demand for a longer-maturity retail bond.

“We are trying to address different investment needs.”

The upcoming sale will also be cheaper for the Italian Treasury than previous inflation-linked BTP Italia bonds.

“We have to protect ourselves from inflation by not just issuing inflation-linked products and by also having nominal products, because our debt has to be sufficiently hedged against different types of risk,” Iacovoni said. (See MNI: Italy Considers Partially-Indexed Retail Bond In 2023)

The Treasury should announce the coupon and the loyalty premium for the June sale in the second half of May, he said, adding that it should offer a yield to maturity in line with the residual maturity of the current four-year BTP.

“We have to follow what's going on in the market in terms of evolution of our yield curve, especially around the four-year maturity,” he said.