By Paul A. Harris
Portland, Ore., Sept. 22 – Royal Caribbean Cruises Ltd. priced $2 billion of 6.25-year high-yield notes in two tranches in a quick-to-market Thursday trade, according to market sources.
The deal included $1 billion of senior secured notes (Ba3/BB-) that priced at par to yield 8¼%. The yield printed in the middle of yield talk in the 8¼% area. Initial guidance was 8¼% to 8½%.
It also included $1 billion of senior priority guarantee notes (B3/B+) that priced at par to yield 9¼%. The yield printed in the middle of yield talk in the 9¼% area and on top of initial guidance that had them coming 100 basis points behind the secured notes.
Books built to $5 billion across both tranches, according to a sellside source, who added that the deal ended up being half done in reverse inquiry.
Investors were heard to be gravitating to the ostensibly subordinate of the two tranches, the 9¼% guaranteed notes, in part because of the higher coupon, but also because the guarantee involves several of Royal Caribbean's premiere cruise ships, which have been capped, in terms of their use as collateral, the sellsider added.
Morgan Stanley & Co. LLC was the sole bookrunner.
The secured notes will be guaranteed by Celebrity Cruises Inc., Celebrity Cruises Holdings Inc. and certain of the company’s wholly owned vessel-owning subsidiaries.
The senior guarantee notes will be guaranteed on a senior unsecured basis by RCI Holdings LLC, which owns 100% of the equity interests of certain of the company’s wholly owned vessel-owning subsidiaries.
The Miami-based cruise ship operator plans to use the proceeds, together with cash on hand, to redeem all of its outstanding 9 1/8% priority guaranteed notes due 2023 and its 10 7/8% senior secured notes due 2023.
| Issuer: | Royal Caribbean Cruises Ltd.
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| Amount: | $2 billion
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| Maturity: | Jan. 15, 2029
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| Bookrunner: | Morgan Stanley & Co. LLC (bill and deliver)
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| Co-managers: | BNP Paribas Securities Corp, BofA Securities Inc., CIBC World Markets Corp., Citigroup Global Markets Inc., Commerz Markets LLC, DNB Markets Inc., DZ Financial Markets LLC, Fifth Third Securities Inc., Goldman Sachs & Co. LLC, HSBC Securities (USA) Inc., Intesa, J.P. Morgan Securities LLC, Mizuho Securities USA Inc., PNC Capital Markets LLC, R. Seelaus & Co. Inc., Regions Securities LLC, Santander Investment Securities Inc., Scotia Capital (USA) Inc., SG Americas Securities LLC, Skandinaviska, SMBC Nikko Securities America Inc. and Truist Securities Inc.
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| Trade date: | Sept. 22
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| Settlement date: | Oct. 6
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| Distribution: | Rule 144A and Regulation S for life
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| Marketing: | Drive-by
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| 8¼% notes
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| Amount: | $1 billion
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| Guarantors: | Celebrity Cruises Inc., Celebrity Cruises Holdings Inc. and certain of the company’s subsidiaries
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| Issue: | Senior secured notes
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| Coupon: | 8¼%
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| Price: | Par
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| Yield: | 8¼%
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| Spread: | 438 bps
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| First call: | April 1, 2025 at 104.125
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| Ratings: | Moody’s: Ba3
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| S&P: BB-
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| Price talk: | 8¼% area
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| 9¼% notes
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| Amount: | $1 billion
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| Guarantor: | RCI Holdings LLC
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| Issue: | Senior priority guarantee notes
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| Coupon: | 9¼%
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| Price: | Par
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| Yield: | 9¼%
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| Spread: | 538 bps
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| First call: | April 1, 2025 at 104.625
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| Ratings: | Moody’s: B3
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| S&P: B+
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| Price talk: | 9¼% area
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