Coupon of the BTp 2052 today in payment: investment of 5000 euros

Coupon of the BTp 2052 today in payment: investment of 5000 euros
Coupon of the BTp 2052 today in payment: investment of 5000 euros
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Day of disbursements for the Treasury, which today will have to pay numerous coupons in relation to as many government bonds. One of these is the BTp 2052, the bond maturing exactly in 30 years, i.e. on 1 September 2052 and with a 2.15% coupon (ISIN: IT0005480980). This bond alone will weigh about 85.6 million euros net on the state accounts. The net expenditure for the half-yearly interest of BTp 2051 is much higher: 121.8 million. If we look at the Borsa Italiana website, we find that the 30-year price today stands at 67.60 cents. What does it mean? That if you buy a security for a nominal € 1,000, you will pay only € 676 for it. And what is the coupon of the BTp 2052 related to? At face value or at market price? If you are an expert or used to invest in bonds, you certainly know the answer: the coupon is always related to the nominal value of the bond, never to the market price.

Let’s now take the example of a investment of 5,000 euros to also understand how much the coupon of the BTp 2052 in payment would be in these hours. I want to include this security in the portfolio for the amount indicated above. However, given the price clearly below par, I will have to spend just 3,380 euros (67.60% of the face value). In exchange, I will get two things: the repayment at maturity of the 5,000 euros of the invested capital and the annual payment of the coupons divided into six-monthly maturities.

Invest 5,000 euros, here is the coupon of the BTp 2052

Out of 5,000 euros, today I would collect half of the 2.15% gross per annum, that is 1.075%. We are talking about 53.75 euros. On this figure, however, the state retains 12.50% in the form of interest taxation. Our net income drops to € 47.03. This will take place every six months, regardless of the evolution of market prices, until maturity.

On September 1, 2052, the Treasury will detach my last coupon and repay the principal. Since I paid 3,380 euros to buy the bond and I will be paid 5,000 euros, I will make a profit of 1,620 euros. Also in this case, before tax of 12.50%, for which the net capital gain will drop to 1,417.50 euros.

Be careful, however, because this gain would come in just 30 years. Therefore, I must take into account that from here to maturity (unless I manage to disinvest with a profit in advance) I will be almost dry-mouthed, having to settle only for the coupon of the BTp 2052. The ratio between net capital gain and actual investment is just under 42% . This percentage must be spread over the 30 years of the investment, using the compound interest formula. There is an annual yield of 1.17%, to which the effective net coupon (also in this case compared to the outlay and not the nominal capital) of 2.78% must be added. Ultimately, we would have a 3.95% net total return.

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The article is in Italian

Tags: Coupon BTp today payment investment euros

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