All the secrets about BTP Green. The interview with the expert
Generous coupon or increasingly environmentalist Italians? The total orders of Italians on the market amount to 84 billion euros BTP Greenthe latest bond launched by the government yesterday, Tuesday 14 May, with an annual rate set at 4.05%, paid in two semi-annual coupons and placed at a price of 99.865, therefore corresponding to a gross annual yield at issue of 4.104% .
But which investors is the title intended for? And how does it stand out? Btp Value? To clarify, Affaritaliani.it he asked Francesco Megnafinance expert and commercial representative in the bank.
First of all, what are Green BTPs?
Green BTPs are government bonds whose proceeds are intended to finance state budget initiatives (i.e. tax incentives and expenses) with environmentally sustainable effects.
What type of initiatives specifically?
The government has established that a total of 11.5-13.5 billion euros will be issued in 2024. And these will be divided into various investments between energy efficiency (48-53% of the total), transport (27-33%), prevention of pollution and circular economy (7.5-8.5%), protection of the environment and biodiversity (6.5-8.5%), research (4-5%) and, to a lesser extent, renewable energy (approximately 1%).
Orders reached a total of 84 billion euros collected, nine times higher than the size of the stock. How do you explain the success of BTP Green?
First of all, I wouldn’t call this a great success… But the fact remains that I doubt that the Italians invested for the size of the coupon. I believe, however, that the good number of orders for the retail part was given by the ever-increasing sensitivity of young people towards environmental and sustainability issues. A question of ethics, in short.
As regards the demand which exceeded supply by 9 times thanks to the push of institutional investors, it is clear that the Green BTP has more potential than the government expected. I also believe it is a strong indicator that the entire environmental sustainability sector represents a market that the government should still focus on and grow further. This fact could be decisive for the issuing of other green bonds in the future.
The “environmentalism” factor is ok, but therefore does 4.05% represent a low coupon?
More than the coupon, it is the maturity of this Green BTP that gives it the least appeal. The bond expires in 2037, so making an investment of this kind lasting 13 years may not be the most profitable strategy.
So, what investment strategy would BTP Green fit into?
Diversify, but this applies to any type of investment plan. Investing in stock and bond funds could make our budget much safer than betting on a single type of security.
The reasoning is simple: if we put two eggs in one basket and it collapses then we lose everything. If, however, we put our two eggs in two different baskets there is a much greater possibility that, even if one falls, the other will remain standing.
But what, then, is the difference with Valore BTPs?
Essentially, the Valore BTPs were created by the government to “bring together” Italians and make them invest in their own country, as that money would go to finance different types of sectors but all to the benefit of the Italian economy.
The Green BTP, on the other hand, focuses on only one type of sector, namely that linked to the environment and sustainability. Another substantial difference is the deadline. While the Green BTP expires after 13 years (in 2037), the last Valore BTP (the fourth) expires in 6 years. Almost half, therefore. A significant factor, which can have a major impact on the investment plan.
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