The rating of Inter’s debt bond is at risk of being lowered due to the situation with DigitalBits’ nonpayment of the fees owed on their main shirt sponsorship deal with the club.
This according to Italian football finance news outlet Calcio e Finanza, who report that the uncertainty surrounding the Nerazzurri’s sponsorship revenues has meant that the rating on their bond could be lowered from “B” by credit rating agency Standard & Poor.
The current rating of Inter’s bond by S&P is at “B”, which is considered to be equivalent to “highly speculative” by the agency.
However, the current rating is based on projections regarding the club’s revenues, including from sponsorships.
These projections are based on the four-year shirt sponsorship deal with DigitalBits, which is worth a total of around €80 million.
The cryptocurrency company have yet to make the payments of the instalments owed on the deal for the current season, and it is highly unlikely that they will be able to do so, let alone to make any of the payments for future seasons.
S&P take this into account, as they project that the volatility in the cryptocurrency sector will make it very unlikely that they will be able to pay a significant part of the agreed-upon amount in their partnership with the Nerazzurri.
Accordingly, S&P project that there is a good chance that Inter will have to find a less lucrative sponsor to replace DigitalBits.
Accordingly, the agency factor into their revised analysis that the Nerazzurri could have sponsorship revenues reduced by as much as 50% for the fiscal year ending in June 2024.
Given how much this would affect the club’s cash flow, the ability to repay their debts could be significantly affected.
Accordingly, S&P are reportedly considering lowering the rating of Inter’s bond on the basis of the DigitalBits.
The agency do note, however, that the strength of the Nerazzurri’s brand remains a strong factor in favour of a higher rating, given that as one of the most popular and recognizable brands within Italian football, the club could always be projected to find a lucrative sponsorship deal.
