Italy to auction 2041 bond with a 3.95% coupon on 13 October

Italy’s Treasury plans to auction another tranche of a government bond on 13 October.

The bond is due to be repaid on 1 October 2041 and pays a fixed annual coupon of 3.95%, in two payments each year.

On the secondary market, it was trading at 90.80 cents per euro of face value, about 9.2% below the 100 it is due to repay at maturity.

At that market price, its estimated annual yield to maturity was about 4.9% before tax.

The bond’s fixed payments can help investors plan income, but they do not rise with inflation.

The article says that, if inflation averages 2.5% over the bond’s life, the investment could preserve capital’s purchasing power and produce a modest real gain after tax and costs.

The Treasury is offering the bond in an ordinary auction, with a further allocation planned for a supplementary auction.