Carnival Corporation & plc Announces Closing of $2.0 Billion 6.125% Senior Unsecured Notes Offering for Refinancing and Interest Expense Reduction

Rhea-AI Summary

Carnival has successfully closed a $2.0 billion senior unsecured notes offering with a 6.125% interest rate, maturing in 2033. The proceeds, combined with cash on hand, were used to redeem $2.03 billion of 10.375% senior priority notes due 2028. This refinancing strategy is expected to reduce net annual interest expense by over $80 million, representing a reduction in interest expense of over 4%.

The new notes will pay interest semi-annually starting August 15, 2025, and are fully guaranteed by Carnival plc and certain subsidiaries. The offering features investment grade-style covenants and was exclusively available to qualified institutional buyers under Rule 144A and non-U.S. investors under Regulation S of the Securities Act.

Positive

• Reduction in net annual interest expense by over $80 million
• Interest rate reduction from 10.375% to 6.125% (over 4% decrease)
• Simplification of capital structure with investment grade-style covenants

Negative

• Maintains substantial debt level with $2.0 billion new notes

Insights

Financial Analyst

This refinancing transaction marks a significant milestone in Carnival's financial recovery strategy, with three key positive implications:

• The successful placement of $2.0 billion in unsecured notes at 6.125% interest, replacing $2.03 billion of 10.375% senior priority notes, represents a dramatic $80+ million reduction in annual interest expense. This improvement in borrowing costs signals strong market confidence in Carnival's credit profile.
• The shift from secured to unsecured debt with investment grade-style covenants is particularly noteworthy, as it indicates a return to pre-pandemic financial flexibility. These less restrictive covenants typically allow for greater operational freedom and reduced reporting requirements, similar to what investment-grade companies enjoy.
• The extended maturity to 2033 provides substantial runway for future growth while eliminating near-term refinancing risks. This timing strategy capitalizes on the current market environment before potential economic uncertainties arise.

The transaction's structure reveals sophisticated liability management, freeing up assets previously used as collateral while reducing interest burden. This creates additional financial flexibility for future strategic initiatives and demonstrates management's proactive approach to optimizing the capital structure.

Looking ahead, the $80 million annual interest savings will directly boost free cash flow, potentially accelerating debt reduction or enabling increased capital investment in fleet modernization. The improved debt profile also positions Carnival more favorably for potential credit rating upgrades, which could further reduce borrowing costs in future refinancing activities.

Transaction included redemption of $2.03 billion 10.375% Senior Priority Notes 

MIAMI, Feb. 7, 2025 /PRNewswire/ -- Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) today announced that Carnival Corporation (the "Company") has closed its previously announced private offering (the "Notes Offering") of $2.0 billion aggregate principal amount of 6.125% senior unsecured notes due 2033 (the "Notes"). The Company used the net proceeds from the Notes Offering, together with cash on hand, to redeem the $2.03 billion 10.375% senior priority notes due 2028 (the "Senior Priority Notes") of Carnival Holdings (Bermuda) Limited, resulting in a reduction in interest expense of over 4%.

The Notes Offering and the redemption of the Senior Priority Notes are a continuation of the Company's strategy to reduce interest expense, simplify its capital structure and manage its future debt maturities. The transaction is expected to reduce net annual interest expense by over $80 million. In addition, the indenture that governs the Notes has investment grade-style covenants.

The Notes will pay interest semi-annually on February 15 and August 15 of each year, beginning on August 15, 2025, at a rate of 6.125% per year. The Notes will be unsecured and will mature on February 15, 2033. The Notes will be fully and unconditionally guaranteed on an unsecured basis, jointly and severally, by Carnival plc and certain of the Company's and Carnival plc's subsidiaries that also guarantee our first-priority secured indebtedness, certain of our other unsecured notes and our convertible notes.

The Notes were offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and outside the United States, only to non-U.S. investors pursuant to Regulation S under the Securities Act.

The Notes were not, and will not be, registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws.

This press release shall not constitute an offer to sell or the solicitation of an offer to purchase the Notes or any other securities and shall not constitute an offer, solicitation or sale in any state or jurisdiction in which such offering, solicitation or sale would be unlawful.

About Carnival Corporation & plc

Carnival Corporation & plc is the largest global cruise company, and among the largest leisure travel companies, with a portfolio of world-class cruise lines - AIDA Cruises, Carnival Cruise Line, Costa Cruises, Cunard, Holland America Line, P&O Cruises (Australia), P&O Cruises (UK), Princess Cruises, and Seabourn.

Cautionary Note Concerning Forward-Looking Statements

Carnival Corporation and Carnival plc and their respective subsidiaries are referred to collectively in this press release as "Carnival Corporation & plc," "our," "us" and "we." Some of the statements, estimates or projections contained in this press release are "forward-looking statements" that involve risks, uncertainties and assumptions with respect to us, including some statements concerning the financing transactions described herein, future results, operations, outlooks, plans, goals, reputation, cash flows, liquidity and other events which have not yet occurred. These statements are intended to qualify for the safe harbors from liability provided by Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts are statements that could be deemed forward-looking. These statements are based on current expectations, estimates, forecasts and projections about our business and the industry in which we operate and the beliefs and assumptions of our management. We have tried, whenever possible, to identify these statements by using words like "will," "may," "could," "should," "would," "believe," "depends," "expect," "goal," "aspiration," "anticipate," "forecast," "project," "future," "intend," "plan," "estimate," "target," "indicate," "outlook," and similar expressions of future intent or the negative of such terms.

Forward-looking statements include those statements that relate to our outlook and financial position including, but not limited to, statements regarding:

• Interest, tax and fuel expenses
• Liquidity and credit ratings
• The transactions described herein

Because forward-looking statements involve risks and uncertainties, there are many factors that could cause our actual results, performance or achievements to differ materially from those expressed or implied by our forward-looking statements. This note contains important cautionary statements of the known factors that we consider could materially affect the accuracy of our forward-looking statements and adversely affect our business, results of operations and financial position. These factors include, but are not limited to, the following:

• Events and conditions around the world, including geopolitical uncertainty, war and other military actions, pandemics, inflation, higher fuel prices, higher interest rates and other general concerns impacting the ability or desire of people to travel could lead to a decline in demand for cruises as well as have significant negative impacts on our financial condition and operations.
• Incidents concerning our ships, guests or the cruise industry may negatively impact the satisfaction of our guests and crew and lead to reputational damage.
• Changes in and non-compliance with laws and regulations under which we operate, such as those relating to health, environment, safety and security, data privacy and protection, anti-money laundering, anti-corruption, economic sanctions, trade protection, labor and employment, and tax may be costly and lead to litigation, enforcement actions, fines, penalties and reputational damage.
• Factors associated with climate change, including evolving and increasing regulations, increasing global concern about climate change and the shift in climate conscious consumerism and stakeholder scrutiny, and increasing frequency and/or severity of adverse weather conditions could have a material impact on our business.
• Inability to meet or achieve our targets, goals, aspirations, initiatives, and our public statements and disclosures regarding them, including those related to sustainability matters, may expose us to risks that may adversely impact our business.
• Cybersecurity incidents and data privacy breaches, as well as disruptions and other damages to our principal offices, information technology operations and system networks and failure to keep pace with developments in technology have adversely impacted and may in the future materially adversely impact our business operations, the satisfaction of our guests and crew and may lead to fines, penalties and reputational damage.
• The loss of key team members, our inability to recruit or retain qualified shoreside and shipboard team members and increased labor costs could have an adverse effect on our business and results of operations.
• Increases in fuel prices, changes in the types of fuel consumed and availability of fuel supply may adversely impact our scheduled itineraries and costs.
• We rely on suppliers who are integral to the operations of our businesses. These suppliers and service providers may be unable to deliver on their commitments, which could negatively impact our business.
• Fluctuations in foreign currency exchange rates may adversely impact our financial results.
• Overcapacity and competition in the cruise and land-based vacation industry may negatively impact our cruise sales, pricing and destination options.
• Inability to implement our shipbuilding programs and ship repairs, maintenance and refurbishments may adversely impact our business operations and the satisfaction of our guests.
• We require a significant amount of cash to service our debt and sustain our operations. Our ability to generate cash depends on many factors, including those beyond our control, and we may not be able to generate cash required to service our debt and sustain our operations.
• Our substantial debt could adversely affect our financial health and operating flexibility.
• The risk factors included in Carnival Corporation's and Carnival plc's Annual Report on Form 10-K filed with the SEC on January 27, 2025.

The ordering of the risk factors set forth above is not intended to reflect our indication of priority or likelihood. Additionally, many of these risks and uncertainties are currently, and in the future may continue to be, amplified by our substantial debt balance incurred during the pause of our guest cruise operations. There may be additional risks that we consider immaterial or which are unknown.

Forward-looking statements should not be relied upon as a prediction of actual results. Subject to any continuing obligations under applicable law or any relevant stock exchange rules, we expressly disclaim any obligation to disseminate, after the date of this document, any updates or revisions to any such forward-looking statements to reflect any change in expectations or events, conditions or circumstances on which any such statements are based.

Forward-looking and other statements in this document may also address our sustainability progress, plans, and goals (including climate change and environmental-related matters). In addition, historical, current, and forward-looking sustainability- and climate-related statements may be based on standards and tools for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions and predictions that are subject to change in the future and may not be generally shared.

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SOURCE Carnival Corporation & plc

FAQ

How much will Carnival (CCL) save annually from its new $2.0 billion notes refinancing?

Carnival will save over $80 million annually in net interest expense through this refinancing transaction.

What is the interest rate on CCL's new $2.0 billion senior unsecured notes?

The new notes carry a 6.125% interest rate, down from 10.375% on the previous notes.

When will CCL's new $2.0 billion senior unsecured notes mature?

The new notes will mature on February 15, 2033.

When does Carnival (CCL) begin paying interest on its new 2033 notes?

Interest payments will begin on August 15, 2025, and will be paid semi-annually on February 15 and August 15.

What was the purpose of CCL's $2.0 billion notes offering in February 2024?

The offering was aimed at reducing interest expense, simplifying capital structure, and managing future debt maturities by refinancing existing higher-interest debt.