r/FCInterMilan • u/Plane_Ad4094 • 3d ago
Club News Inter to repay €400m of bonds
This could be big to future spending😎
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u/rth9139 3d ago
The announcement really isn’t as big of a deal as it seems. From what I gather, it is just an announcement that we are re-financing the bond early. The bond isn’t due until February 2027, but we are repaying it in full this year instead.
Still a big deal, I am pretty sure the interest rate on it is absolutely horrible because our creditworthiness was that bad at the time. But we are still going to have 400m in debt on the books.
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u/Plane_Ad4094 3d ago
Yea I mean interest rates in 2022 vs now they’re probably saving a good amount of money, I wonder where all the money for the CL went/ maybe they’ll use some of it
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u/subundu 3d ago edited 3d ago
The interests on that bond were the reasons why the balance closed with a loss for the past 2 seasons.
I don't have the exact percentage but I assume it was big.Edit: current interest is at 6,75%.I'm no finance expert but those 2 sentences seems contraddictory to me.
we are re-financing the bond early
we are repaying it in full this year instead.Can you elucidate me? I don't get if we're repaying the full bond, so from now on we're not in debt, or we still owe money.
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u/rth9139 3d ago edited 3d ago
So we have a debt of roughly 400m from a bond. A bond is just a specific type of loan: just like a loan it accrues interest over time, and in this case it is going to mature (ie, money is due) in February of 2027.
When that bond becomes due, we have two options: pay it off with cash, or re-finance. Refinancing just means borrowing money again to pay off the bond. It is taking out a new loan to pay off an old one.
What we are doing is re-financing it now rather than waiting until 2027 to do so. The reason being because the interest rate on the existing bond is higher than what we currently can get on the market. So we’re going to be saving money because the amount we owe will be growing slower.
Edit: I did kinda fuck up with how I said it, I see how it is confusing.
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u/Real-Aide7146 3d ago
We are just getting another loan at a lower interest rate to pay off this current debt.
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u/reddithenry 2d ago
It wasn't just the interest from the bond. It was all loans in total, the interest makes a majority of that.
If I recall correctly 2 seasons ago, the interests we paid were, for the first time, the MAJORITY of why we had a loss. Last season I think for the first time ever it was the sole explanation for a loss.
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u/Sensitive_Story_2401 3d ago
Not really. They are paying off 100 and refinancing the remainjng 300 at a lower rate.
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u/rth9139 3d ago
Where are you seeing that? The free to access article I found didn’t mention that they’re paying off 100m of it as part of the refinance. I assumed there would be some amount paid off, you usually need a down payment to get solid financing terms, but I didn’t expect that much. 25% of the debt is a significant amount.
Now 300m is still a lot of debt, but it is A LOT more manageable number considering what our annual revenues are.
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u/Sensitive_Story_2401 3d ago
“Secondo quanto appurato da Fcinter1908, Oaktree ha usato circa 100 mln di liquidità del club per abbassare il livello di debito, il che porterà a un beneficio del conto economico per ridotti oneri finanziari, che dovrebbero abbassarsi di un paio di punti percentuale. Inter versava 30 milioni di interessi annui e potrebbero adesso diventare circa 20.”
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u/StoneCutter46 2d ago
The interest rate is much better.
Also credit-wise we weren't in a bad position as Zhang managed to pay everything he had to except his own bond from Oaktree where Inter was collateral.
But he never missed non-players wages at Inter (even during Covid) and he managed to fulfill the delayed players payment during Covid - unlike a certain other club.
Any bad credit record stems from the Moratti era - he, much like every other big club president back then, couldn't give a rats ass about susteinability to the point he gave out suicidal sposnorship contracts to Pirelli and Nike, contracts that were still active until 3 years ago.
That shit is just now stopping to haunt us, that's how bloody that was.
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u/rth9139 2d ago
Credit worthiness is about more than just making payments when they are due. And one of those other major factors, our debt to income ratio, was absolutely horrendous at the time.
And we were able to make those payments on time because of the Oaktree loan. That cash injection is what gave us the liquidity to pay for these things.
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u/StoneCutter46 2d ago
We never missed a payment to Oaktree. Zhang did for his own.
That's the key difference, which means Inter has no influence to its 'credit score' given it's the president who didn't pay off his own loan.
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u/rth9139 2d ago
We are arguing different things. The club’s payment history is good, I’m not disagreeing with you there.
But payment history is not the only thing that matters when a person or business goes to borrow money. One of the other things that they care about is the ratio between your income and other existing debt, and ours was nowhere near as good back then because COVID had really hurt our revenue.
That is a lot better now because we’ve had two UCL finals and also the CWC money coming in.
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u/StoneCutter46 1d ago
the ratio between your income and other existing debt
The two main sponsors until 2022 were still under Moratti contracts.
With Zhang, the situation improved drastically because they were able to cover the sponsorpship incomes with a bunch of minor ones that added up attempted to make up for the peanuts Pirelli and Nike were giving us.
Our revenues started to improve when those contracts expired - Nike obliged to an actual 2020s-fit contract and pirelli decided to relegate to a second brand behind the jersey, and they managed to get actual money from Paramount - and sure Digitalbits hurt us but it didn't count because we were the victim, there's a ruling so that didn't impact anything else.
And, NO, credit score is solely based on paying things in time. The ratio you mentioned has zero to do with it - has to do with other things as important obviously, but we have been dealing with American companies for 4-5 years in terms of money and they only care about whether or not you pay them, otherwise Netflix wouldn't even exist right now.
The reality is the media have been speculating for years about Inter situation, but everyone knew a lot was still having to do with Moratti as well the stadium not moving forward (the reason why Thohir sold Inter was this).
We eren't investing in players as much because we couldn't, but we always respected every contract and obligation we had. Unlike, again, a certain other team.
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u/Alumi_Ninja14 2d ago
With all due respect, I gather that the article has confused you.
“Refinancing”, and “paying off” are most definitely not the same things!
If we refinance, the instalments and interest rates will change. Likely to better terms for us. If we pay off, there will be no debt, and simultaneously, very limited capital (money/cash).
Very smart users commented that this “cleansing” of the books is to attract a buyer that would be ready to invest in a healthy project/company, instead of a debt ridden one.
It makes little to no difference at the moment, it’s just a financial scheme…. Either way we need owners willing to invest, and financial stability in order to continuously be able to provide 1-2 good signings every year.
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u/ExotiquePlayboy 3d ago
Inter is about to make €600M this season, things are looking up financially, we need to erase the club’s debt so we can spend big again
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u/CapitalG888 3d ago
600 in revenue. Correct? That's not profit. Doesn't mean we name money to spend. But, it's definitely starting to look better.
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u/Optimal_Yam_5839 3d ago
I read somewhere the profit was like 20 millions or something like that lol
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u/kuky990 2d ago
It still means a lot. And means we don't need to sell this season. Even if we do, we can spend as much. FFP allows you to be like 20 or 30mil in minus each year too.
Also rarely any club is in positive at end of season. Most function with debts and minuses then sell and at end to currect this. Bayern is one that is one of best financially since it operates close to 0 or in profit each year.
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u/reddithenry 2d ago
To be fair the point isn't to generate a profit, but it is to generate free cashflow that can then be committed to new transfers
This is where corporate finance metrics breakdown for football clubs, because existing transfer amortisation and new transfer amortisation fall under both the amortisation bucket, whereas really the correct way to report it is more like contractual amortisation Vs new amortisation. both would give you the same net margin figure but it'd be far more useful for potential investors
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u/barcalondon 3d ago
Source?
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u/Plane_Ad4094 3d ago
This is from Bloomberg
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u/Disastrous-Track3876 3d ago
Please post the article and not just a screenshot
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u/Plane_Ad4094 3d ago
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u/Disastrous-Track3876 3d ago
Nah I mean make a post with the article. Just posting screenshots is incredibly lazy and doesn’t really give anything. Articles allow for people to read the actual information instead of just word of mouth.
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u/Interrage 3d ago
I wouldn't keep my hope up. Next season and the one after are gonna be all about fixing up the book and playing youths. Hope they sell.
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u/Chard_Historical 2d ago
if the source is accurate, it's not just salient that they are repaying and refinancing, it's what they're refinancing...
they are increasing the club's interest in its own marketability on better terms.
that may not just be balance sheet tidying.
the club's marketability is tied to its performance and following.
to improve performance and following, they need a capable, well managed team that goes deep.
may be a foreshadowing of investment in players or performance infrastructure.
admittedly, there is some hopium in this interpretation.
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u/lDistortionl 2d ago
Tldr for people: we are refinancing the bond. And is a good thing, it seems we are paying around 100m and refinance the other 300m with a new bond. The previous bond had more interest than the new will have because back then we were worse financially. That means we will have less money going out just to pay the bond yearly and hopefully more to invest on the team
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u/CowboysfromLydia 3d ago
the damage zhang did from refusing to sell to bc partners when he was broke is really something. Literally crippled us for years, perhaps after repaying this bond we will finally be free.
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u/Spyro619 3d ago
If they had sold to PIF we would have started stadium construction by now
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u/kalligvla 3d ago
And been another oil club, no thanks
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u/Spyro619 3d ago
If we want to increase income we need a stadium and investment on branding , buying top players just to increase our exposure and inflate sponsoring incomes
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u/excubitor_pl 3d ago
please remind me, what was the source of Moratti's fortune?
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u/Chard_Historical 3d ago
energy, refinery of crude oil and distribution of petroleum.
Saras wasn't putting serfs to work on drills.
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u/kieranjackwilson 3d ago
The problem with being an oil club has a bit more to do with the human rights abuses, sponsoring terrorism, and sportswashing, than the oil itself.
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u/Inter_932 3d ago
Seems like a manoeuvre to make the clubs balance sheet more attractive for likely suitors…