Summary
Carnival Corporation (CCL) announced the closing of a private offering of $2.03 billion aggregate principal amount of 10.375% Senior Priority Notes due 2028. The proceeds are expected to be used primarily to repay amounts drawn on its revolving credit facility, with remaining funds available for general corporate purposes. As collateral, Carnival is contributing 12 unencumbered vessels with a net book value of approximately $8.2 billion to the issuer, Carnival Holdings (Bermuda) Limited. The notes are guaranteed by Carnival Corporation, Carnival plc, and certain subsidiaries, and are unsecured. This financing aims to bolster liquidity and manage existing debt obligations. Investors should note the relatively high interest rate of 10.375%, indicating the market's perception of risk or the company's financial position at the time of issuance. The indenture includes various covenants that restrict the company's ability to incur additional debt, make restricted payments, and dispose of assets, which are standard for such offerings but could limit future financial flexibility. Notably, many of these covenants may be permanently removed if the notes achieve investment-grade ratings from major credit agencies.
Key Highlights
- 1Carnival Corp. closed a $2.03 billion offering of 10.375% Senior Priority Notes due 2028.
- 2Proceeds will be used to repay revolving credit facility draws and for general corporate purposes.
- 312 unencumbered vessels with a net book value of approximately $8.2 billion are contributed as collateral.
- 4The notes are unsecured but are guaranteed by Carnival Corporation, Carnival plc, and certain subsidiaries.
- 5The interest rate on the notes is 10.375% per annum, paid semi-annually.
- 6The Indenture includes covenants that limit the company's ability to incur additional debt and make restricted payments.
- 7Many covenants may be permanently waived if the notes achieve investment-grade ratings.