Btp Valore, is it worth buying?

Is it worth buying the new BTP Valore? The minimum yield of the BTP Valore in issue from February 26th has been revealed.
It will have a guaranteed minimum coupon rate of 3.25% for the first three years, then rising to 4% for the last three.
Let's analyze all the characteristics of this government bond in detail, also observing the returns offered by other BTPs on the market, to understand if it is worth buying.
Btp Valore February 2024: what you need to know A comparative analysis of the new Btp Valore with what the secondary market offers – useful for understanding whether it is worth buying – pushes us to observe the Btp 3.5% 1.3.2030, which it has the same duration as the new Btp Valore.
At 12:00 on 23 February the aforementioned BTP was trading at 100.16 with a gross yield to maturity of 3.50%.
The new Btp Valore, if these coupons were confirmed at the end of the placement, paid 100 and with the sequence of coupons as per the announcement, in addition to the final loyalty premium of 0.7%, yields a gross annual 3.74%.
This yield is obtained by calculating the weighted average of the 3.25% and 4% coupons, i.e.
3.625%, to which is added the 0.115% loyalty bonus "per annum", i.e.
spreading the final 0.70% over the six years.
We therefore find ourselves with a yield advantage on the new BTP Value of +0.24% compared to the secondary market on 23 February.
The new Valore BTP is more convenient than the 1.3.2030 BTP.
But not by much.
The problem is that we don't know: what the Italian rate curve will be at the end of the placement on Friday 1 March 2024; what will the Btp-bund spread be in the 6-year segment at the end of the aforementioned placement.
As regards point 2, currently the Italian 6-year BTP 3.50% 2030 has a spread of approximately 107 basis points above the BUND 2.4% 15.11.2030, as BLOOMBERG shows us below: Italy's credit risk it has proven to be quite stable in recent weeks, and has actually fallen below 150 bps if we take 10-year maturities.
I believe that this risk could remain unchanged at the end of the placement and therefore remain around 106 -108 basis points.
If the opposite were to happen, i.e.
if the spread between BTPs and Bunds widened, it would mean that we would have entered a risk-off phase of the financial markets, with an increase in stock and bond volatility and an increase in the yields of secondary market BTPs.
In this case, the increase in the secondary market spread would make the 3.5% 2030 BTP more competitive compared to the Valore BTP, since it would reach lower prices and higher yields on the market, to the point of filling the "gap" with the new BTP Value of 24 cents above.
As regards point 1, however, we are used to rather frequent fluctuations in the rates on BTPs in recent weeks, even in the absence of risk-off phases in the financial markets, because they are linked to the fluctuating trend of international rates, and, ultimately analysis, to the trend of the benchmark rate for all government bonds worldwide, i.e.
the 10-year US Treasury rate.
If over the next week, for whatever reason, Eurozone macro data and US macro data were to come out that were more effervescent than expected, this would indicate that the path of the Fed and the ECB for the start of the new bearish monetary policy would be a longer and spread out over time.
Market rates would then rise.
The BTP 3.5% 2030 would take little to fill the gap with the BTP Valore March 2030 and could thus have a yield to maturity even higher than 3.74%.
Making the new BTP Value unattractive.
But be careful, if we were in the presence of "significant shocks" upwards on international rates, it cannot be ruled out that, at the end of the placement, the MEF could revise the two coupon brackets of 3.25%-4% upwards to adapt to the changed market conditions.
However, the opposite could also happen: with the release of macroeconomic data that is "colder" than expected, there would be lower inflationary expectations than the current ones, which would lead the markets to buy bonds in the 5-year-10-year segment, causing prices to fall secondary market yields on the 6-year period even below the current 3.50%.
And then it would be better to subscribe to the new BTP Valore.
In conclusion, since we do not know how the bond markets will evolve next week and since the yield spread of the new BTP Valore 2030 is quite narrow compared to the BTP 3.5% 2030, it is best not to rush into subscribing everything immediately on the first day placement, but divide the investment into 2 or 3 tranches during the placement week.
Perhaps waiting at least until Wednesday 28 February for the first order, and, in the absence of early closing, deciding to send the second and definitive order on Thursday 29 February or Friday 1 March by 11.00.
Everything will depend on the comparison with the yield of the 3.5% BTP 2030 on the secondary market when you decide to proceed with the subscription of the new BTP Valore, but always keeping yourself informed about the possibility of early closure.
DISCLAIMER The information and considerations contained in this article should not be used as the sole or primary support on which to make investment decisions.
The reader retains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk propensity and his time horizon.
The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation to the public for savings.