(Finance) – Il treasure predicts in 2024 overall gross issues of medium-long term securities in a range between 340 and 360 billion euros, in line with those of 2023, and will continue to offer tools dedicated to retail, in consideration of the excellent feedback received from the market on the issues dedicated to the public of retail savers in 2023 and also taking into account the general context of higher interest rates compared to the recent past. The Ministry of Economy and Finance (MEF) communicates this by publishing the 2023 Public Debt calendar and the Guidelines for the management of Public Debt.
The 2023 trend
They were carried out in 2023 issues of medium-long term securities for a total of just under 360 billion euros, of which 16.5 in exchange. Consequently, issues net of exchanges amounted to 343 billion euros. The BOT emissions they amounted to approximately 156 billion euros. A total of securities were therefore issued for an amount of just under 516 billion euros.
The average annual cost at issueat the end of the 2023 placements, consistently with the global rate rise scenario, was equal to 3.76%, an increase compared to 1.71% in 2022. average life at the end of the year remains stable at around 7 years (6.97 years, compared to 7.04 years in 2022). The data improves further if we also consider the European SURE and NGEU funding. In this case the average lifespan goes from 7.31 in 2022 to 7.25 years at the end of 2023.
The 2024 forecast
In 2024 financing needs will be determined by maturities of outstanding securities which, net of BOTs, will be equal to approximately 265 billion euros and from new needs of the state sector of the year which, based on preliminary public finance estimates consistent with the NADEF of September and the Draft Budgetary Plan 2024 of last October, should be around 130 billion euros.
Taking into account the loans of the NGEU package and the cash availability management activity, which will also benefit from the revenues of the fourth NGEU installment arriving at the end of 2023, the information currently available allows us to forecast total gross emissions of medium-long term securities in a range between 340 and 360 billion euros, therefore in line with those of 2023.
The main objectives
The debt issuance and management policy in 2024 will be mainly oriented towards achieving the following objectives: a) ensuring coverage of needs at costs as much as possible in line with market trends; b) consolidate the results already achieved in terms of exposure to the main risks, in particular that of interest rates and refinancing, also through progressive and gradual reduction of emissions in the short segment of the yield curve; c) contribute to a progressive improvement in the liquidity conditions of the secondary market; d) continue the efficient management of the Treasury’s liquid deposits.
The strategy
To this end, the Treasury’s strategy on the market will be developed in the coming months through: a) the commitment to guarantee predictability and regularity of issues on all the main segments of domestic securities; b) the calibration of the volumes offered to the market in order to give greater weight to the sectors with better liquidity on the secondary market and greater depth of demand; c) the continuation of the offer dedicated to retail investors, aimed at expanding their direct participation in public debt, also through new instruments; d) the further development of the Green BTP sector through an overall volume of issues useful for promoting the liquidity of individual securities and the needs of specialized ESG investors; e) the use of liability management tools (such as share swaps and buybacks); f) monitoring the evolution of foreign currency markets to be exploited both in Global and EMTN formats, with a particular focus on dollar placements, in the presence of favorable economic conditions.
The individual titles
As regards the issues of individual securities, the MEF explains that regarding the BTP Value – the new family of government bonds dedicated exclusively to individual savers and similar – carried out two issues during 2023, in the months of June and October, for a total amount of over 35 billion, attracting widespread appreciation from the of the market. “This new class of securities can have different financial structures and in 2024, if the conditions are met and based on financing needs, the Treasury will evaluate the opportunity to carry out one or more issues of BTP Valore, reserving maximum discretion in evaluating, close to the placement, the most appropriate financial structure regarding the maturity, type and frequency of payment of the coupons and the final extra loyalty bonus, reserved for retail investors who purchase the security upon issue and hold it until maturity”, reads in the document.
Two will expire in 2024 BTP Italy for a total of approximately 12 billion euros. Taking into account the volumes expiring, in order to continue to satisfy the demand of institutional and retail investors and to provide a now consolidated tool for protecting their savings, the Treasury “will evaluate the opportunity to carry out one or more issues of BTP Italia during the yearreserving maximum flexibility in choosing the most appropriate deadline for the new title”.
It will instead be evaluated “carefully” for next year the possibility of carrying out a new placement of BTP Futura“based on market conditions and demand for the instrument.”
Finally, in 2024 the Treasury will continue with its emissions program BTP Green “for volumes aligned with the average of these three years of issue, providing liquidity to existing securities and evaluating the possibility of placing a new security through syndication”.