The 415 million Inter bond, issued in February 2022 by Inter Media and Communications SpA, is one of the ‘junk bonds’. The rating agency Fitch confirmed the rating ‘B+’ with a stable outlook, a development that is also linked to the collapse of the Asian sponsors and the case of non-payments by the shirt sponsor Digitalbits: the bond is therefore judged ‘highly speculative‘ and on the financial markets it is defined as ‘junk bond‘ o ‘junk title‘.
THE NOTE – This is learned from a note from Fitch, published by Calcioefinanza.it. The rating reflects Inter’s consolidated credit profile, which in turn reflects the stability of Serie A within the European football landscape and the company’s strength internationally. The recent failure of the main shirt sponsor to make payments this season has reduced the diversity of Inter Milan’s revenues and created greater reliance on on-field performance and shareholder support during upcoming periods of negative cash generation. However, the strength of the brand should help the company find a replacement, as long as the team maintains its sporting success.”
“Revenue diversity has declined in recent years, especially due to the expiration of several Asian sponsorship contracts and non-payment of the current main shirt sponsor. This has increased dependence on performance in the field, potentially leading to higher revenue volatility”, continues the rating agency. However, explaining that “bonds benefit from the preferential use of media revenues and commercial revenues, partially insulating investors from many of the ongoing operational risks that are present on a consolidated basis.”
Fitch concludes: “Inter reported an increase in revenues in FY22 (excluding accounting shifts following the pandemic in FY20 and FY21) due to the progressive normalization of Matchday revenues. Commercial revenues decreased, as expected, at due to declines in Asian sponsor contracts, partially offset by new contracts. Personnel costs decreased as part of an increased roster restructuring effort, but not as rapidly as expected. As a result, Adjusted EBITDA ( without player trading) was slightly negative, although better than previously anticipated.”
