The third issue of the BTP Futura, with a maturity of 16 years, dedicated to the financing of measures to support the economic recovery from the Covid-19 pandemic and the expenses related to the vaccination campaign, it saw 132,296 contracts with an average denomination of 41,400.22 euros. The placement was therefore equal to 5.47 billion euros, the Mef announced. The previous issues had concluded with deposits of 6.1 and 5.7 billion euros respectively.
The bond has enjoyment on April 27, 2021 and matures on April 27, 2037, and will have guaranteed minimum returns that will be paid with half-yearly coupons. The annual coupon rates will be respectively 0.75% for the first four years, 1.20% for the next four years, 1.65% for the next four and 2% for the remaining four years of life of the title. In technical jargon this is the so-called step up mechanism.
The fidelity award
A double fidelity premium is added to the guaranteed minimum yield for investors who subscribed to the bond upon issue. At the expiry of the first 8 years of the bond’s life, there will be a premium between 0.4 and 1.2% of the invested capital (based on 40% of the growth of the Italian nominal GDP calculated by the Istati. following eight years, a final premium will be paid which will include two components: the first equal to the remaining 60% of the average GDP growth rate recorded in the first 8 years, with a minimum of 0.6% up to a maximum of 1 The second is equal to 100% of the average GDP growth rate recorded from the ninth to the 16th year, with a minimum of 1% and a maximum of 3% of the invested capital.
By adding up the tranches, for those who hold the stock until maturity, the premium varies from a minimum of 2% to a maximum of 6%. This is a value equal to double the 1-3% range that characterized the first two issues which had shorter maturities.
60% of contracts for an amount of less than 20 thousand euros
Although the issuing methods do not allow to have precise data on the characteristics of investors, from the information collected by Dealers, Co-Dealers and other intermediaries, it can be assumed that the participation of retail investors was prevalent compared to that of private banking share of 57 percent and 43 percent respectively). Within the share subscribed by retail investors, it is estimated that about 66 per cent have placed the order through the branches of the banking networks (both by physically going to the branch and by sending the order remotely), while about 34 per cent through home banking. As regards the geographical distribution of orders received, almost all orders came from domestic investors (approximately 97%). During the placement period, of the 132,296 contracts concluded on the MOT (the Electronic Market of Bonds and Government Securities of the Italian Stock Exchange) about 60 per cent was worth less than 20,000 euros, while if we consider contracts up to 50,000 euros, we arrive at about 86 per cent of the total.
Deadline unexplored
The demand was very strong on the first day both in terms of turnover and number of contracts, then recording a physiological decline during the subsequent trading days, the Mef underlines in a note. The nearly 5.5 billion euro achieved by the BTP Futura represent an exceptional result and a further sign of confidence, also important in the long term, said Pietro Bianculli, Head of SSA / FI Bond Syndicate at UniCredit. The Mef has once again shown that it is possible to be innovative by diversifying funding channels and maintaining a very high level of demand, notes Bianculli. The BTP Futura format, with the introduction of the double loyalty bonus, made it possible to explore a maturity such as 16 years, which until now was not considered appropriate for the world of retail and private investors, he concludes. Orders were collected from two dealer banks Intesa Sanpaolo and Unicredit during the placement period, which began on 19 April 2021 and ended at 13 on 23 April, also thanks to the support from two co-dealer banks Banca Akros and Banca Sella Holding.