Cruise operator Carnival Corporation has halved its borrowing cost by more than $ 2.5 billion in debt it took on at the start of the pandemic, underscoring investors ’desire to support companies. which could benefit from economic reopening.
Carnival, which has not been able to operate in its U.S. market since March last year, said last week that it finally plans to put three of its U.S.-based cruise lines into service by July. .
The first cruises will be destined for Alaska after President Joe Biden signed a bill allowing the cruise to resume in the northernmost state of the country.
A limited number of cruises have resumed in Europe. Carnival and others have said trips around the UK coast have been sold while restrictions remain on more exotic international travel.
On Wednesday, Carnival issued two loans: one in the United States for just over $ 1.8 billion led by JPMorgan and one in Europe for $ 794 million led by Barclays, according to people familiar with the deal. The loans are both due in 2025 and will be used to repay the debt incurred in June last year with the same maturity.
The dollar loan will pay 3 percentage points above the Libor interest point, though less than half of the 7.5 percent spread the company has to pay to borrow the money a year ago. The euro range also fell from 7.5 percentage points on its benchmark to 3.75 percentage points.
The refinancing comes after a debt imbalance in 2020 led to its annual interest expenses rising from about $ 200m in the 2019 calendar year to more than $ 1.2bn in the last 12 months.
People close to the deal say Carnival would have been able to exploit debt investors several months ago, but have decided to wait to avoid incurring any early repayment charges.
Fundraising is a further sign of the dramatic return of sectors affected by the pandemic in recent months, with investors betting on an economic recovery stimulated by the launch of Covid-19 vaccines. Carnival joins other companies cutting interest costs after last year’s recovery, such as the pandemic-devastated Kohls and Nordstrom chain stores.