Carnival Raises Bond Offering, Lowers Interest Rate

Carnival has increased its bond issue to $4 billion from $3 billion and trimmed its coupon to 12% from 12.5%, says a report.
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Shares of Carnival  (CCL) - Get Report dropped Wednesday even as the cruise-line company tightly linked to the coronavirus pandemic reportedly increased its dollar-bond sale to $4 billion from $3 billion and lowered its interest rate for the bonds to about 12% from 12.5%.

Knowledgeable sources told Bloomberg that the increased amount stems from the company’s decision to drop a euro-denominated tranche. The company originally tried to sell notes in both currencies to investors in the U.S. and Europe, Bloomberg reported.

While the bond issuance is rising, Carnival’s planned sale of stock has been trimmed to $750 million from $1.25 billion, separate sources told Bloomberg.

Carnival still has its old investment-grade ratings from Moody’s Investors Service and S&P Global Ratings, but the bond offering is being treated like junk.

On Tuesday, the company announced it was suspending its dividend and stock buyback program, and also fielding lawsuits related to the coronavirus outbreak aboard several of its ships.

In February, the Diamond Princess ship, a part of Carnival’s Princess Cruise line, hosted 700 cases of coronavirus on its ship off the coast of Japan.

Carnival announced Monday that was extending its pause in operations through May 11.

Cruise lines weren’t part of the government’s $2 trillion fiscal stimulus package in response to the coronavirus, despite lobbying from Carnival and other companies in the industry.

The major cruise companies have their headquarters overseas, but foreign companies are excluded from the aid plan.

At last check, Carnival shares traded at $11.11, down 15.6%. The stock has dropped 78% in the last three months.