In September inflation in Italy reached 4.2%. Savers therefore risk seeing their uninvested capital rapidly lose real value due to rising prices. In these cases, very often, Italians seek refuge in BTPs to defend their savings through coupons.
In the past the State had issued inflation-indexed bonds precisely for these eventualities. No similar issues are planned for 2026, however there are some traditional BTPs that are about to be placed on the market with relatively high coupons and there are also Valore BTPs, which will be issued in the second part of October. Which stocks have higher yields than inflation?
Do the BTPs at auction on October 13th beat inflation?
Although inflation is currently 4.2%, it is unlikely to remain that high for the entire lifespan of the BTPs at auction on October 13, which ranges from 3 to 7 to 15 years. Taking this measure as a basis could therefore be too rigid an approach for evaluating BTP returns. In general, if you take into account a long enough period of time, inflation in a healthy economy tends towards 2%.
The 3-year BTP expiring in September 2029
The first security to take into consideration is the shortest, the 3-year one, ISIN code IT0005716839. It has a coupon of 3.00% and is the seventh tranche of a BTP which today the market prices at 98.10. Its gross yield is therefore 3.70%, which reduces to 3.24% if taxes are applied. This yield:
- does not beat current inflation of 4.2%;
- beats average inflation by 2%.
However, because it is such a short-term security, it is also less likely that inflation will approach the average over its remaining life. It is therefore necessary to consider that inflation could remain high enough for a long enough period of time to exceed the government bond yield.
The 7-year BTP expiring in September 2033
The BTP with Isin code IT0005722845 expires in 7 years and has a slightly better yield than the previous one. The gross comes to 4.12% between price and coupon, then net it reaches 3.60%. Also in this case, therefore:
- does not beat current inflation of 4.2%;
- beats average inflation by 2%.
On its side, compared to the previous one, the 7-year BTP has the longest duration, therefore a greater probability that inflation, on average, will return to 2% in the meantime. However, this means tying up the money for longer if you want to achieve the desired result.
The 15-year BTP expiring in October 2041
The government bond that can most count on smoothing inflation towards 2% is the 15-year BTP. Between coupon and price, its yield is 4.58% gross, which becomes 4.01% net. So:
- comes close to beating current inflation of 4.2%;
- beats average inflation by 2%.
The yield on this security is certainly the best, but we must not forget that we are talking about tying up the capital for 15 years, unless we sell the BTP when we need it, with the risk, however, that the price has fallen and, consequently, that the yield will worsen.
BTPs Value and inflation
Another opportunity to invest in BTPs will arrive on October 19th, with the BTP Valore and the BTP Valore together. The coupons and yields of these instruments will be communicated only on October 16th. They will have the same yields to maturity, but with two different types of different coupon payments:
- The Btp Valore will have a 2+2+1 step up coupon;
- The Valore Insieme BTP will have a single coupon at maturity.
These securities have the advantage of being dedicated to retail investors, to private individuals, at the time of issue. This could make them the right tools to defend private savings from inflation.
