Royal Caribbean driving by with $1 billion five-year senior notes; initial talk low-12% area

By Paul A. Harris

Portland, Ore., Aug. 15 – Royal Caribbean Group plans to price a $1 billion offering of five-year senior notes (B3/B) in a Monday drive-by trailing a conference call with investors, according to market sources.

Initial guidance has the notes coming to yield in the low-12% area.

BofA Securities Inc. is the left bookrunner. Morgan Stanley & Co. LLC is the joint lead bookrunner. Other syndicate names are expected to be announced later.

The Rule 144A and Regulation S for life notes become callable after two years at par plus 50% of the coupon. They feature a 40% equity clawback at par plus the full coupon during the non-call period. They also feature a 101% poison put.

The issuing entity will be Royal Caribbean Cruises Ltd.

The Miami-based cruise company plans to use the proceeds to make principal payments on debt maturing in 2022 and/or 2023. Pending such uses the company may temporarily apply the proceeds to repay its revolver or other borrowings.

The company's most recent placement of high-yield bonds came on Jan. 4, 2022 when it priced $1 billion of 5 3/8% senior bullet notes due July 2027.

Monday's proposed drive-by deal marks the seventh time that Royal Caribbean has raised cash in the junk bond market since the onset of the coronavirus pandemic in early 2020.

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