Carnival to refinance $1 billion in senior notes

MIAMI - Carnival Corporation (LON:CCL) & plc (NYSE/LSE: CCL; NYSE: CUK), the world’s largest cruise operator, has launched a private offering of $1.0 billion in senior unsecured notes, maturing in 2030, to refinance its existing 10.500% senior unsecured notes due the same year. The company aims to reduce its interest expenses through this refinancing strategy.

The new notes, which will not be registered under the Securities Act or any state securities laws, will be offered to qualified institutional buyers and to non-U.S. investors outside the United States. The company has already issued a conditional notice of redemption for the outstanding principal amount of the 2030 Unsecured Notes, with the redemption set to occur on or about February 28, 2025. The redemption price will be 100.0% of the principal amount, plus the applicable make-whole premium and accrued and unpaid interest up to the redemption date. InvestingPro analysis reveals that while Carnival (NYSE:CCL)’s short-term obligations exceed its liquid assets, the company has demonstrated strong revenue growth of 15.88% over the last twelve months, reaching $25.02 billion.

Carnival Corporation plans to fund the redemption using the net proceeds from the notes offering along with available cash on hand. The completion of the redemption is contingent upon the closing of the notes offering.

The indenture governing the new notes is expected to contain investment grade-style covenants, which could potentially provide the company with more favorable borrowing terms and reflect a level of financial stability.

This financial maneuver comes at a time when the global cruise industry continues to navigate the challenges posed by geopolitical uncertainties, pandemics, and economic fluctuations that impact consumer travel behavior. For deeper insights into Carnival’s financial health and future prospects, investors can access comprehensive analysis and additional ProTips through InvestingPro’s detailed research reports, which transform complex Wall Street data into actionable intelligence.

The information in this article is based on a press release statement from Carnival Corporation & plc. It should be noted that the press release contains forward-looking statements which involve risks and uncertainties, and actual results may differ materially from those projected. The company cautions that these forward-looking statements are not guarantees of future performance and are subject to known and unknown risks.

In other recent news, Carnival Corporation has been the subject of several analyst updates. Moody’s (NYSE:MCO) Ratings upgraded its ratings for Carnival, citing improvements in the company’s credit metrics and expectations for further improvement this fiscal year. The Debt/EBITDA ratio is projected to approach 4.0x by the end of fiscal 2025 and 3.5x in 2026 due to modest earnings expansion and debt reduction.

UBS maintained a Buy rating on Carnival, highlighting the potential financial benefits from the company’s new private island destination, Celebration Key. UBS anticipates that Carnival could generate around $150 million in EBITDA in its first full year of operation, potentially increasing Carnival’s yield by 100-160 basis points annually starting in late 2025.

Truist Securities adjusted its financial outlook for Carnival, raising the company’s price target while maintaining a Hold rating. The firm’s updated outlook reflects changes in earnings per share estimates and the competitive landscape in the cruise industry.

Stifel analysts maintained their Buy rating on Carnival, suggesting that their yield assumptions for the years 2025 to 2027 might be too conservative. They noted promising booking and demand patterns for 2025 and extending into 2026.

Lastly, Truist Securities reiterated its Hold rating on Carnival shares, noting the company’s strategic focus on enhancing its best-performing brands and reducing debt. The firm also highlighted the potential for Carnival to resume dividends and share repurchases if current trends in booking and pricing remain robust.

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