Royal Caribbean driving by with $700 million 5.5-year bullet notes; initial talk high 5% area

By Paul A. Harris

Portland, Ore., Jan. 4 – For the sixth time since the onset of the coronavirus pandemic, Royal Caribbean Cruises Ltd. is making an appearance in the high-yield new issue market.

The Miami-based cruise line plans to price a $700 million offering of senior notes due 2027 (expected ratings B2/B) in a Tuesday drive-by trailing a conference call with investors, according to market sources.

Initial guidance is in the high 5% area, a bond trader said, adding that the deal is in the market with $200 million of reverse inquiry.

Proceeds will be used to make principal payments on debt maturing in 2022. Pending that application of the proceeds the company may temporarily use the cash to pay down its revolver or to repay other debt.

BofA Securities Inc. is the left lead bookrunner. J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC are the joint lead bookrunners.

Citigroup Global Markets Inc., DNB Markets Inc., Fifth Third Securities Inc., Goldman Sachs & Co. LLC, Scotia Capital (USA) Inc., SMBC Nikko Securities America Inc. and Truist Securities Inc. are the senior bookrunners.

BNP Paribas Securities Corp., HSBC Securities (USA) Inc., Mizuho Securities USA Inc., Santander Investment Securities Inc., SG Americas Securities LLC and SEB are the junior bookrunners.

Academy Securities Inc., DZ Financial Markets LLC, PNC Capital Markets LLC, R. Seelaus & Co. Inc. and Regions Securities LLC are the co-managers.

The Rule 144A and Regulation S for life 5.5-year notes feature a par call nine months prior to maturity but are otherwise non-callable.

The Tuesday drive-by represents Royal Caribbean's sixth pass at the market (seven tranches) since the coronavirus began wreaking havoc on the cruise line industry in the early months of 2020.

The previous pandemic-era issues include:

• $1 billion of 10 7/8% senior secured notes due June 2023 and $2.32 billion of 11½% senior secured notes due June 2025 priced on May 13, 2020 (both investment grade-rated);

• $1 billion of 9 1/8% senior guaranteed notes due June 2023 priced on June 4, 2020;

• $1.5 billion of 5½% senior notes due April 2028 priced on March 4, 2021;

• $650 million of 4¼% senior notes due June 2026 priced on June 15, 2021; and

• $1 billion of 5½% senior notes due August 2026 priced on Aug. 11, 2021.

Counting the new $700 million offering, by Tuesday's close Royal Caribbean figures to have sold $8.17 billion of bonds in seven tranches since the beginning of the pandemic.

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