Carnival Eyes Another Junk Bond Sale in Fifth Deal of Covid Era

(Bloomberg) -- Carnival Corp. is in early discussions with investors for $600 million of junk-rated notes, which would be the cruise line’s fifth dollar bond sale in the Covid-19 era, according to people with knowledge of the matter.

The company is testing investor appetite for an unsecured deal that may mature in five to seven years, though talks are early and details could change, said the people, who asked not to be identified discussing a private transaction.

Representatives for JPMorgan Chase & Co., which is leading the talks, and Carnival declined to comment.

Carnival has taken advantage of wide-open credit markets to borrow its way through the pandemic that has essentially put the entire cruise industry on hold for almost a year. All four offerings since April have been used for general corporate purposes, padding the company’s balance sheet as it burns billions of dollars in cash.

The company’s nearest maturity is 500 million euros ($605 million) of 1.625% bonds due on Feb. 22. They currently trade around par, according to Bloomberg data.

Carnival’s most recent bond sale in November -- its first unsecured deal in the pandemic -- drew more than $11 billion of orders for a transaction that raised about $2 billion in dollars and euros. Earlier in the year, it had to pledge its ships as collateral for bonds and loans to entice investors. The company has also tapped the equity markets for additional capital.

Miami-based Carnival reported an adjusted fourth-quarter net loss of $1.9 billion, but said that demand is surging for 2022. Its flagship brand Carnival Cruise Line has has extended a pause on trips leaving from the U.S. through at least April 30.

©2021 Bloomberg L.P.