New BTP Italia, maturity 5 years and final bonus doubled-up

The Ministry of Economy and Finance (MEF) has published the termsheet of the next BTP Italia issuance, the security conceived for retail investors that will help to finance the increasing State cash-borrowing requirement related to Covid-19 emergency.

The issuance, that will take place from May 18th to May 21st 2020, with the initial three days reserved to retail investors, will have a maturity for the first time of 5 years and a final bonus equal to 0.8 per cent (double compared to previous issuance) for investors who purchase the bond during the First Phase of the placement period and hold it until the final maturity (May 26th, 2025).

Otherwise, the next BTP Italia on offer will have the same characteristics of the previous issuances: semi-annual coupons indexed to the FOI (Indices of Consumer Prices for blue and white-collar households with the exclusion of tobacco) to which the payment of the accrued inflation in the semester is added (with a floor in the event of deflation, that guarantees that the coupon payments can never go below the definitive real coupon rate), bullet format.

The bond will be placed through MOT, the retail Borsa Italiana’s screen-based market, in two phases: the First Phase will last three days, from May 18th to May 20th 2020, without early closing option, and will be reserved to individual investors and other persons similarly classified; the Second Phase, reserved to institutional investors, will take place in the morning of May 21st, 2020. For institutional investors, in the event that their orders are greater than the final supply decided by the MEF, Borsa Italiana will proceed to apply a mechanism of proportional allocation. On the contrary, for individual investors and other persons similarly classified, there will not be any rationing, as incoming orders will be fully fulfilled, as in all the previous issuances.

The guaranteed minimum annual (real) coupon rate will be communicated to the public on Friday, May 15th 2020, while the definitive annual (real) coupon rate will be communicated before the opening of the Second Phase of the placement period.

As in the previous issuances, there are no fees to be borne by investors, while the taxation treatment continues to be equal to 12.5 %, as for all government securities.

In the coming days, the MEF will publish on the website of the Public Debt the Technical Note for intermediaries and will update the FAQ, to provide investors and market operators with all the necessary information in order to take part in the forthcoming placement.