The Treasury will auction a Short Term BTP and a 15-year BTP€ia on June 24th. Maximum collections of 4.25 billion euros are expected, with possible additional amounts exceeding 750 million euros. The returns should be above 2%, given the annual clauses foreseen even before the placement on the bond markets.
The issue will end on 26 June with the publication of the subscription regulations. Specialist intermediaries in government bonds and aspiring specialists will be able to participate in the auction.
The Short Term BTP at auction on June 24th
The first of the two financial products that the Treasury will auction on June 24 is the Short Term BTP with a two-year maturity. Its main features are:
- ISIN code, IT0005692410;
- deadline, 2/28/2028;
- annual coupon, 2.20%;
- maximum amount offered, 2.5 billion euros;
- additional amount for specialists, 500 million euros.
The Short Term BTP is a short-term government bond that falls into the category of BTPs, rather than BOTs, which have a duration that usually does not exceed 12 months. Unlike them, it has a coupon but, as can be seen from the yield, it is relatively low, given the duration of the security.
The first of these coupons will be paid on August 28, 2026. The accrued days, the interest accrued but not yet paid on this security from the date of the last coupon, will be 118.
The Btp€i auction, how inflation-linked bonds in the Eurozone work
The other product auctioned on June 24th is markedly different from the previous one. Btp€i have a much longer duration, 15 years, and are indexed to European inflation. Their main characteristics are:
- ISIN code, IT0005547812;
- deadline, May 15, 2039;
- annual coupon 2.40%;
- maximum amount available, 1.75 billion euros;
- additional amount for specialists, 262.5 million euros.
Also in this case the first coupon is paid before the normal six-monthly deadline, November 15th. Btp€i are securities designed to protect invested money from medium and long-term price changes. Both the semi-annual coupons and the capital that is repaid at maturity vary based on inflation. However, they are not securities that follow the trend of Italian prices, such as the Btp Italia Sì, but that of the Eurozone, the set of all the countries that use the Euro as their currency.
How government bond auctions work
The auction through which regular government bonds are issued, such as that of BTPs and BTP€i on 24 June, is reserved for authorized operators, called specialists or aspiring specialists. These operators present up to five offers for each product indicating the price at which they would be willing to purchase it. The lower the price, the more risky the security is and therefore the higher its returns will be.
The Treasury evaluates the proposals and excludes those that it does not consider convenient given the market prices. This allows him to determine both the issue price and the quantity of debt issued in a fairly arbitrary manner. The public can book titles through authorized intermediaries.
