10 Long-Term Government Bonds to Buy Today for Medium-Term Investment

Focus on Medium-Term BTPs: A Closer Look at Opportunities

The bond market continues to attract interest, with savers looking for the best BTPs to buy.
While the spotlight is currently on the upcoming closure of the new BTP Valore issue, it’s time to focus on the potential opportunities for investors with a medium-term time horizon.

Why Choose Medium-Term BTPs

Defining “medium-term” as a timeframe ranging from 2 to 5 years, and occasionally up to 10 years, by observing the market, we can identify BTPs worth considering for purchase based on the net yield offered.
The net yield takes into account the expected annual coupon and the impact of the capital repayment at maturity, based on the purchase price on the secondary market.

The focus on the mid-range of the yield curve – rather than the short or long term – is justified by the increased potential of medium-term BTPs to benefit from the imminent reversal of the European Central Bank’s monetary policy approach.

In an economy where interest rates are declining, BTP prices in the market tend to rise.
For example, if the ECB interest rates are currently at 4.5%, buying a BTP with a coupon of 3.85% and a remaining duration of 5.6 years can be advantageous.
If the ECB gradually lowers its reference rate to 3.5% post-purchase, the BTP will continue to yield 3.85% annually, now higher than the ECB rate.

The Best Medium-Term BTPs Today

To take advantage of this dynamic, focusing on medium-term bonds with durations from 2 years onwards, up to a maximum of 6-7 years, is recommended.
Here are some of the top medium-term BTPs with the highest coupons:

  • 7.25-BTP-1NV26: Gross Coupon 7.25%, Net Yield 2.8%
  • 6-BTP-1MG31: Gross Coupon 6%, Net Yield 2.82%
  • 5.25-BTP-1NV29: Gross Coupon 5.25%, Net Yield 2.79%
  • 4.75-BTP-1ST28: Gross Coupon 4.75%, Net Yield 2.82%
  • 4.1-BTP-01FB29: Gross Coupon 4.1%, Net Yield 2.86%
  • 4-BTP-30OT31: Gross Coupon 4%, Net Yield 3.01%

These BTPs provide attractive opportunities for investors seeking medium-term positions in the bond market.
It’s essential for investors to analyze the net yield, considering factors such as tax rates and secondary market purchase prices, to make informed decisions.

Please note: The information provided in this article is for informational purposes only and should not be considered as investment advice.
Readers are encouraged to conduct their research and make investment decisions based on their risk tolerance and investment horizon.

Author: Hermes A.I.

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