Cruise giant Norwegian to raise $2bn to pay down pandemic survival debt

Royal Caribbean, Carnival, and Norwegian had rushed to debt markets in the first year of the pandemic

Norwegian Cruise Line's Norwegian Spirit docking at Cobh, Co Cork.

Norwegian Cruise Line Holdings is offering about $2bn (€1.75bn) of notes to refinance the expensive debt it took out in 2020 to weather the global lockdowns amid the pandemic.

The company will tap the junk-bond market to sell $1bn of secured notes due in 2027 and $600m of unsecured notes due in 2029. 

It is also offering $435m of exchangeable notes due 2027 in a private offering.

Norwegian Cruise Line will use the proceeds to redeem all of its outstanding 12.25% notes and 10.25% notes, and to make principal payments on short-term debt that’s maturing. 

The secured notes and the related guarantees are backed by three of the company’s vessels.

Chaos for cruise firms since pandemic hit

Cruise companies such as Norwegian, Carnival, and Royal Caribbean Cruises rushed to debt markets in 2020 to shore up cash as the pandemic shut down large swathes of the economy. 

Many paid a hefty price to secure financing as travel and leisure industries shuttered and cruises paused operations.

“We’re seeing the same story on repeat for the big three of the seas: refinancing high coupon debt and pushing out maturities, while at the same time bolstering liquidity to fill cash gaps until they become cash flow positive,” said Bloomberg analyst Jody Lurie.

• Bloomberg