Cruise Line Giant Carnival Raises $6.25 Billion Borrowing High Cost to Weather Economic Fallout
Carnival, the world’s biggest cruise line operator, stated it has attracted $6.25 billion by issuing new debt and equity Wednesday, borrowing at a high cost to weather the economic storm of the coronavirus pandemic.
Regardless of having its cruise ships idled to comply with coronavirus travel constraints, the corporate was able to draw enough investors that its capital elevating was oversubscribed a number of times over, albeit at a steep price, sources said.
Carnival priced $4 billion in bonds maturing in 2023 – upsized from the $3 billion initially planned – with a yield at par value of 11.5%, it mentioned in a statement.
By comparison, Carnival paid a 1% gain in October, when it borrowed $657.7 million in the European debt market. Moreover, Carnival had to make use of its ships as collateral to attract bond investors Wednesday.
The corporation also attracted $1.75 billion in convertible notes with a 5.75% coupon, it added.
Beyond the bond issues, Carnival issued new stock to raise $500 million, less than the $1.25 billion it was focusing on. The issue was priced at $8/share, the corporation stated.
Carnival shares had rumbled 33.2% Wednesday on the capital raising news, ending at $8.80.
The funds are anticipated to be enough to cover Carnival’s current financial obligations for the next 12 months, the corporate stated Tuesday.