2022 opens with very interesting prospects for some government bonds. The current economic conditions will lead to favoring some niche government bonds that can give a lot of satisfaction to those who have them in their portfolios. For these government bonds, 2022 could be a golden year and be covered by a cascade of money.
For government bonds, especially BTPs, last year was not a happy one. The strong recovery in the economy brought with it two elements unfavorable to fixed rate bonds. Expectations of interest rate hikes and rising cost of living have pushed the prices of these bonds down.
Just give an example. The prices of the BTP expiring in February 2025 closed the year at 100.7 cents, but at the beginning of 2021 the bond was quoted at 102.2 cents. Fixed-rate government bonds with longer residual maturities experienced greater price declines. The past ones have been dramatic days for our BTPs, this is what savers risk with these securities in their portfolio.
For these government bonds, 2022 could be a golden year and be covered by a cascade of money
The greater the duration of the BTP and the higher and the variability of prices, the volatility. Volatility can offer excellent earning opportunities for those who are familiar with the operation of Multi-year Treasury Bills. For example here how a saver earned 3% in 3 days with BTPs and how to replicate the operation.
Not all BTPs are fixed rate, there is a category of Multi-year Treasury Bills which are variable rate. The yield and coupon of these securities vary by indexation. THE BTP Italia they are government bonds indexed to Italian inflation and created above all for private savers, retail investors.
The main feature of this BTP is to offer a return aligned with the evolution of inflation. Analysts for this year estimate the cost of living to rise sharply in Italy. That’s why 2022 could be a golden year for these government bonds.
Let’s see what these titles are. The BTP Italia expiring in May 2023 (Isin: IT0005253676) is one of these. The price at the time of analysis is 103.7 cents and the gross yield to maturity is 1.65%. But if inflation increases, the yield and the price will rise.
The same reasoning applies to the BTP Italia expiring in April 2024 (Isin: IT0005174906). The price at the time of the analysis is 104.2 cents and the gross annual yield to maturity is 2.2%. The BTP Italia maturing in May 2025 (Isin: IT0005410912) has an even higher yield. The price is 108.4 cents and the annual gross yield to maturity is 2.4%.
Deepening
Out of the money, these are the most profitable government bonds
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