By Paul A. Harris
Portland, Ore., Jan. 4 – For the sixth time since the onset of the coronavirus pandemic, Royal Caribbean Cruises Ltd. completed a benchmark deal in the high-yield bond market.
The Miami-based cruise line priced an upsized $1 billion issue of 5.5-year senior bullet notes (B2/B) at par to yield 5 3/8% in a Tuesday drive-by, according to market sources.
The issue size increased from $700 million.
The yield printed at the tight end of yield talk in the 5½% area. Initial guidance was in the high 5% area.
The deal was in the market with $200 million of reverse inquiry and ended up playing to $4.5 billion of demand at the close of books, a trader said.
After breaking to a robust 101 bid, 101½ offered, the new Royal Caribbean 5 3/8% notes due July 2027 eased to par ¾ bid, 101¼ offered, the trader said.
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. was the left lead bookrunner. Joint lead bookrunners were J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC.
Senior bookrunners were 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.
And junior bookrunners were BNP Paribas Securities Corp., HSBC Securities (USA) Inc., Mizuho Securities USA Inc., Santander Investment Securities Inc., SG Americas Securities LLC and SEB.
The Tuesday drive-by represented 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.
With the new issue in the tally, Royal Caribbean has sold $8.47 billion of bonds in seven tranches since the beginning of the pandemic.
| Issuer: | Royal Caribbean Cruises Ltd.
|
| Amount: | $1 billion, increased from $700 million
|
| Issue: | Senior notes
|
| Maturity: | July 15, 2027
|
| Left lead bookrunner: | BofA Securities Inc.
|
| Joint lead bookrunners: | J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC
|
| Senior 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.
|
| Junior bookrunners: | BNP Paribas Securities Corp., HSBC Securities (USA) Inc., Mizuho Securities USA Inc., Santander Investment Securities Inc., SG Americas Securities LLC and SEB
|
| Co-managers: | Academy Securities Inc., DZ Financial Markets LLC, PNC Capital Markets LLC, R. Seelaus & Co. Inc. and Regions Securities LLC
|
| Coupon: | 5 3/8%
|
| Price: | Par
|
| Yield: | 5 3/8%
|
| Spread: | 395 bps
|
| Call protection: | Par call nine months prior to maturity, otherwise non-callable
|
| Trade date: | Jan. 4
|
| Settlement date: | Jan. 7
|
| Ratings: | Moody's: B2
|
| S&P: B
|
| Distribution: | Rule 144A and Regulation S for life
|
| Price talk: | 5½% area
|
| Marketing: | Drive-by
|
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