What does the ok placement of the 50-year BTP tell us?
The Mef has announced the placement, through a syndicate of banks, of 5 billion of the new 50-year BTP, maturing in March 2072 and interest rate at 2.17%: the share has received orders for 64 billion. While the Recovery Fund… The italics of Giuseppe Liturri
The Ministry of Economy announced this afternoon the issue and placement, through a syndicate of banks, of 5 billion of the new 50-year BTP, maturing in March 2072 and rate at 2.17%. This title has received orders for 64 billion.
Orders for 66 billion also arrived for the 7-year BTP, issued for 7 billion at a rate of 0.36%.
These numbers speak for themselves and tell a story that should be normal: that of a state, the second largest manufacturing power in Europe, which accesses the financial markets by exploiting the abundance of liquidity and the hunger for returns.
It is easy to predict that a substantial portion of those securities will end up in the ECB / Bankitalia portfolio in the next few days, equally hungry for public securities to be purchased under the PEPP program, which up to March 2021 saw the purchase of Italian securities for € 157 billion. of which 21 in the last two months .
Faced with this massive and immediate financial availability that can be used, without any conditions whatsoever and without presenting plans whose gestation is taking months, our country's investment expenditure is instead hanged on a cumbersome and very slow instrument that goes under the name of Recovery Fund o Next Generation UE ( NGEU ). Announced in May 2020, agreed between European leaders in July, and now lost in the mists of a laborious ratification process by the parliaments of the 27 member states. With Germany temporarily blocked by its Constitutional Court and Poland risking a government crisis.
Money, that of the NGEU – which will arrive late (if it does arrive) and is characterized by enormous bureaucratic and procedural complexity and conditional on compliance with macroeconomic rules that are now old and recessive such as the Stability Pact – which has a cost for our country significantly higher than albeit low interest rate that we will pay to repay loans to the EU or the contributions we will pay to the EU after 2027 to repay the subsidies.
A cost, compared to which 2.17% of the unconditional 50-year BTP seems a gift.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/che-cosa-ci-dice-il-collocamento-ok-del-btp-a-50-anni/ on Wed, 07 Apr 2021 17:45:26 +0000.