Buying a BTP below par

BTP training

Buying a BTP below par

Buying a BTP (Buono del Tesoro Poliennale) below par means buying the security at a price lower than its nominal value (100). Here's what to consider in this situation:

Meaning of Buying Below Parity
- Price Below 100: If a BTP is trading at a price below 100, it means that you can buy it at a discount to its nominal value. For example, a BTP with a price of 96 is bought at a cost lower than its nominal value.

Higher Yield
- Increased Yield: Buying below par increases the effective yield of the security. In fact, in addition to the coupons, when the BTP expires, you will receive the nominal value (100). This can lead to an additional gain compared to the coupons themselves.

Market Risk
- Market Conditions: A BTP may trade below par due to higher interest rates on the market or higher risk perceptions related to the issuer. It is important to evaluate the reasons why the price has fallen.

Taxation
- Withholding Tax on Coupons: The coupons received will be subject to a 12.5% tax. Furthermore, if you sell the BTP before maturity at a higher price than the purchase price, you will have to consider the taxation on capital gains.

Investment Strategy
- Evaluation of Opportunities: Buying BTPs below par can be an interesting option for investors seeking returns. However, it is essential to analyze the economic context and your liquidity needs.

Conclusion
Buying BTPs below par can offer opportunities for returns, but also involves risks related to market conditions. It is important to make a careful assessment before making a decision.

Information on BTPs

Choose a topic from the list below and learn more about it

Taxation on BTPs

The maturity of a BTP

Liquidity risk of BTPs

Selling BTPs at maturity

Inflation risk of BTPs

Dividends

The price of a BTP

Interest rate risk in BTPs

Reinvestment risk of BTPs

MOT Market

The periodicity of BTPs

The profit from a BTP

Is it worth investing in BTPs?

BTPs and risks

Stock Market Calendar and Trading Hours

Inflation and BTPs

BTPs, BOTs, CTZs and CCTs

What is a bond

Capital gains

Selling BTPs before maturity

Buying a BTP below par

Choosing between BTPs and STOCKS

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BTP Value

BTPs Valore are medium-term variable rate bonds issued by the Italian State.

How to calculate a BTP

Enter how much to invest in BTPs and the simulator will immediately calculate the net yield by processing the purchase price, maturity of the security, interest on the coupons, day of purchase, amount of the investment, reduced taxation of 12.5%

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Find out how much you can earn by investing in BTPs. The simulator will immediately calculate the net yield by processing the purchase price, maturity of the security, interest on the coupons, purchase day, amount of the investment, preferential taxation of 12.5%

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A BTP yield simulator useful for calculating the expected earnings from an investment in Multi-Year Treasury Bonds. It takes into account variables such as the interest rate, the duration of the bond and taxes.

Buying a BTP below par