F.A.Q. – Questions and…answers

 

How can you buy Government securities?

You can buy Government securities both through auctions and on secondary markets; in any case it is necessary to address your bank or any authorized financial intermediaries.

Purchasing through auctions, in which case the advantage is that of being exempt from commissions but for BOTs, requires the investors to book the desired amount within at least one day prior to the day of the auction. The latter is divulgated through the calendar.

 

Where can you find information about Government security features?

The features of Government bonds (BOTs, CTZs, CCTs, BTPs and BTP€i) issued in the domestic market are explained in detail in the bond files prepared on purpose for each security and available in the area Treasury securities.

The features of Government bonds (Commercial Paper, Medium Term Notes, Global bond) issued in the international market and the respective issuance programs are available in the area International Funding Program.

 

What are the Bonds (BTP) linked to European Inflation?

The inflation linked BTPs are Government Securities with 5, 10 and 30 year maturity. They are medium-long term and floating securities, because both the amount redeemed at maturity, and the semi-annul coupon are revaluated on the basis of the Euro zone inflation, measured by the Harmonized Index of Consumer Price (HICP), excluding tobacco. For further details you can consult the specific bond file.

 

How does the Treasury issue Government bonds?

Government bonds are issued through auction or through syndication. The most important issuance procedure in the domestic market is the auction. The syndication is mainly adopted for the placement in international financial markets.

 

What kind of auction does the Treasury adopt?

The placement through auction can follow two methods: competitive bidding (for BOTs) and marginal auction (for BTPs, CCTs and CTZs). The competitive bidding settles that any bid is satisfied at the price posted, whereas the marginal auction settles that all the requests are allotted at the same price, the so-called marginal price. Only authorized dealer are allowed to participate to the auction.

 

What is a syndicated group?

A syndicate is a group of banks which is given the mandate to place a specific amount of Government bond that the Treasury wants to issue. The banks that participate to the syndication are mainly chosen among Specialists in Government bonds and have to ensure an efficient selling procedure and an adequate distribution of that bond.

 

Who are the Specialists in Government Bonds?

Specialists in Government Bonds are those specific intermediaries, appointed by the Treasury, who are market makers and own precise rights and obligations. They have the commitment to subscribe, according to the relative rules, Government bond auctions, to guarantee a constant liquidity in the secondary market and they also have the exclusive rights to participate to the reopenings that follow the auctions, to the buy-back transactions and to the exchange offer auctions as well as to be, all other things be equal, the preferential intermediaries to be addressed when  forming a syndication group.

 

 

When do you issue Government bonds?

Government bonds are issued in accordance with the issuance annual calendar that the Ministry of Economy and Finance circulates. The calendar indicates the auction dates and the settlement dates with the distinction between short-term securities (BOTs and CTZs) and medium-long term ones (BTPs and CCTs). Besides, the quarterly issuance program specifies the financial features of the bonds that will be issued in the following quarter.

 

Where do you publish offering announcements of government bond auctions?

You can find the offering announcements for each issuance directly on the home page of our website, in the area Auctions of Government bonds. Those communications are available also on the following major financial networks: Bloomberg (index page MDTE), Reuters (index page TESOROITALIA) and Moneyline Telerate (index page 47710 – 47711).

 

What is the yield of the BOTs and of the other Government securities like?

The bond yield depends on the placement result. Auction results and placements through syndications are published in this website and in the major national newspaper.

You can also find an annual summary which contains key interest rates at issuance of Government securities and, in particular, those mentioned in the present lows, as the minimum interest rate of 12 month BOTs and the maximum one.

 

Where can I find historical data about Government bonds?

A new section, called  has been set up inside Public Debt Statistics area. Historical series since 1980 up until nowdays have been compiled regarding Government Debt Breakdown by Instruments, weighted average life of Government Debt, details on Government bonds auctions (BOTs, CTZs, BTPs, CCTs).

 

Where can you find issuance prospectus of securities and  CCT coupons?

The issuance prospectus of government bonds are decrees published in the Official Gazette of the Republic of Italy. Some decrees, the most important, are also available in the area “Laws and Regulations” of this website.

CCT coupons, indexed to the 6 month Treasury Bill yield, are periodically published in the Official Gazette.

 

What is the taxation of Government securities like?

The current tax regime on Government Bonds provides:

- for all taxpayers earning interest on Government bonds and running a business activity, the interest is not subject to any tax at source or substitutive withdrawal and contributes, together with the profit and loss income items, to the determination of the total taxable income;

- for all other subjects, tax is collected on a lieu tax basis by the financial intermediaries, at a fixed rate of 12.5%. You apply the lieu tax both on the coupons and on the difference between redemption value and issue price; for CTZs and BOTs on the whole difference between redemption value and issue price.

 

Which are the commissions applied from banks to Government securities?

Commissions applied to final clients on short term securities (BOTs) are indicated in the decree for transparency in the government bond placement which establishes the maximum amount that banks can apply to their clienteles at the subscription of the bond. Additionally, those commissions have to be exhibited in the venues open to the public through the exposure of specific informative prospectus.

For medium-long term bonds (BTPs, CCTs, CTZs) savers are not subjects to the payment of placement commission. In this case, in fact, the Treasury provides Bank of Italy with commissions that will be attributed, entirely or partially, to the financial intermediaries taking part  in the auction.

 

What is the amount of Public Debt and what is the outstanding of  Government bonds?

The amount of Public Debt and the outstanding of Government bonds, as well as the trend of Public Debt /GDP ratio, is available directly on the home page of the website, http://www.dt.tesoro.it/ENGLISH-VE/Public-Deb/

 

 

Where can you find information about the major aggregates of public finance?

Public Debt, as defined in article 104 of Maastricht Treaty, is monthly published on the supplement “The Public Finances” to the Statistical Bulletin of Bank of Italy. The data is also yearly published on the home page of the public debt website, http://www.dt.tesoro.it/ENGLISH-VE/Public-Deb/.

The public sector borrowing requirement is monthly published through press release in the specific area in the Ministry of Economy and Finance website, www.tesoro.it.

Finally, General Government net borrowing and the GDP at market price are elaborated from Istat and available at this link: http://www.istat.it/English/Economy/National-a/index.htm

 

What are the Guidelines for Public Debt Management?

The document Guidelines for Public Debt Management describes the guidelines that the Treasury intends to follow in the following two years regarding the issuance policy and public debt management.

 

What is the accrued interest?

 Accrued interest is the interest rate quota already matured from the last coupon payment to the trade date considered. For further information on the calculation of accrued interest you can check the specific document in the website.

 

What are the exchange transactions like?

The exchange auctions are those transactions which the Treasury uses to issue a new bond by been paid through an outstanding one. To the issuer, the exchange transactions are a further instrument for the debt management policy. The announcements and the results of these transactions are available in the area Special Transactions. Only Specialists in Government Bonds are allowed to participate.

 

What is the coupon stripping?

Coupon stripping is the splitting of coupons from the bond's nominal amount to be redeemed. The coupon stripping transaction generates a zero coupon bond series from each bond. For further information you can check the specific area dedicated to the coupon stripping.

 

Are there Government bonds issued abroad?

Republic of Italy is considered one of the most significant issuer on international capital markets, besides the role already played on domestic market. Issuance programs on the international capital markets aim at diversifying  the investor base in order to curb the whole cost of funding and properly address the refinancing risk. The Republic provides funding in the international capital markets through the Global Program, the Medium Term Note Program and Commercial Paper Program.

 

Is it possible to hold a printed Government bond?

Thanks to the dematerialization process the management and the accounting of the government securities has been made easier and  more efficient. Since 1998 government securities are represented by accounting entries in favour of the entitles. The dematerialization was introduced by the Legislative Decree June 24, 1998 n.213.

 

What does  “secondary market” mean?

Secondary market is the market on which Government bonds trading  takes place. The existence of a secondary market promotes liquidity, so as bonds  can be sold before redemption at a relative fair price. The Electronic Platform Secondary Market of Government bonds (MTS), set up with a Ministerial Decree in 1988, is managed by M.T.S. SpA. Corporation. Besides M.T.S., which is a wholesale market, there is a retail secondary market where you can negotiate government bonds and other securities (MOT), managed by Borsa Italiana SpA. Finally it is possible to buy and sell government bonds, through financial intermediaries, even on non regulated markets (so-called Over the Counter markets).

 

Is there a newsletter or a mailing list for  Public Debt?

Directly on the home page of the website http://www.dt.tesoro.it/ENGLISH-VE/Public-Deb/ through the area “SUBSCRIPTIONS” it is possible to receive at your own e-mail address all the documents published in the area “Auctions of Government Bonds” and “What’s new”.