The new short-term BTP is here: what it is and compare it to current accounts

Not until the closing of the Italian bond subscription opening on June 20 that the Ministry of Economy and Finance launched the auction, starting on June 24, 2022, for short-term BTPs. These are not inflation-linked bonds and are a development of Ctz, zero-coupon certificates that typically last 24 months with which the government finances public debt.

BTPs and short term alternatives

The total return is 1.75% and coupons are separated every six months, for the first time on November 30, 2022. It follows that the term will be 23 months, with a maturity date of May 30, 2024 and thus in line with the approved policies of CTZ which set time limits between 18 and 30 a month.

Reservations are possible Starting from 23 June The placement is through the canonical marginal auction in which professionals and aspiring specialists in government bonds can participate, who will have to send applications through the interbank network, addressing them to the Bank of Italy.

The total amount offered is between 3.5 billion and 4 billion euros, and the list of subscriptions will be published on June 29, after the additional auction scheduled for June 27 starting at 3 pm.

On the other hand, the BTP € i, the bond indexed with European inflation that usually accompanies this type of deposit, has not been envisaged, precisely because of the BTP Italy issuance being completed in these hours.

The yield of these short-term bonds, gross, is 1.75%, and therefore net of approximately 1.55%, Can’t make up for inflation (Istat’s latest estimate talks about 7.3%) But some aspects should be taken into account: term does not commit capital for long periods, stay in the context of short term, no concrete alternative solutions are foreseen. Deposit accounts do not offer comparable returns and usually require investments that exceed 24 months. Checking account bonuses do not even have to be taken into account, and the most honest observation that can be made, if there is no need for portfolio diversification, is to wait a few months to understand how to move, particularly by noting whether inflation expectations of arrest will actually be reversed.

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