Carnival Plans Loan Sale to Refinance Costly Pandemic Bonds

By Davide Scigliuzzo (Bloomberg) —

Carnival Corp. is taking another stab at replacing expensive bonds sold at the onset of the pandemic with a new $1.5 billion loan.

The cruise ship operator is looking to syndicate a secured loan maturing in 2028 to replace a chunk of the 11.5% notes that it issued in April 2020 to boost liquidity while Covid-19 halted travel, according to people with knowledge of the matter.

Carnival has started marketing the loan to potential investors at a spread of 3.25 percentage points over the London interbank offered rate and scheduled a Monday call with lenders for 11 a.m. New York time, said the people, who asked not to be named because the details are private.

While the offering may not fully extinguish the 11.5% notes, the refinancing could save Carnival more than $100 million in annual interest expense, Bloomberg Intelligence said in a note on Monday.

In July, the company sold $2.4 billion of junk bonds with a coupon of 4% to buy back some of the 11.5% notes, on which the company originally had $4 billion outstanding. Carnival only used about $2 billion of proceeds from the July sale to extinguish the pandemic debt, so there’s $2 billion left outstanding.

–With assistance from Lara Wieczezynski.

© 2021 Bloomberg L.P.

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