Inter Milan return to the bond market with a 415 million euro debt refinancing

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Inter Milan face higher borrowing costs after a €415m return to the bond market following a deadly pandemic for both the Italian soccer club and its Chinese majority owner Suning .

The refinancing of debt by the defending Serie A champions comes at a critical time for European football teams, who are still finding their feet after losing billions of euros in revenue due to stadium capacity restrictions to limit the spread of the virus.

Although Inter’s bond was requested, it carried a coupon, or yield, of 6.75%, up from the 4.875% cost of the 300 million euro notes issued in 2017, when it debuted in the debt market.

The refinancing is crucial for Inter Milan, led by chairman Steven Zhang, who won their first Serie A title in a decade in the 2020-21 season but then sold star striker Romelu Lukaku and moved on. is separated from his winning coach Antonio Conte in the midst of a financial crisis. .

“Demand for the show far exceeded supply, demonstrating the market’s appreciation and confidence in the strength of the club’s project,” Inter chief executive Alessandro Antonello said.

This came “despite the turmoil recorded in recent weeks by the financial markets and the continuing uncertainty linked to the current pandemic scenario”, he added.

Markets have been choppy as traders weigh the prospects of higher interest rates and a potential war in Ukraine. Meanwhile, Serie A clubs are still playing to heavily reduced audiences as their English Premier League rivals return to full capacity.

Inter issued the bond, which was coordinated by Goldman Sachs as bookrunner, through a so-called MediaCo, an entity for its broadcast and sponsorship revenue that is separate from the side company football.

Investors generally favor the stability of TV money, but fear football operations due to exposure to the industry’s tendency to overpay to sign star players and cover their multimillion-dollar salaries .

Inter recorded a net loss of €245 million at group level in the 12 months ended June 30, compared to €102 million a year earlier, as higher revenue was more than offset by higher costs. The club also suffered from minimal matchday revenue.

Suning secured a 275 million euro loan from Los Angeles-based asset manager Oaktree Capital last year to help Inter meet its cash flow needs. Inter’s bond documentation warns that Chinese government policy could limit how much Suning can invest in the company, following a crackdown on overseas sports acquisitions.

The documents also showed Inter lost millions of dollars in revenue after contracts with a series of Chinese sponsors were terminated.

Inter were among 12 elite teams that backed the creation of a so-called European Super League last April but quickly backed out of the plan after fans protested and politicians issued warnings to clubs.

The project was designed to restore club finances by creating a new Europe-wide club competition for a select group with the aim of increasing broadcast revenue and ensuring their participation each year.

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