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SS/RCCL Finances: Improving, Options, Questions??!!


TLCOhio
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4 hours ago, AmazedByCruising said:

Maybe the ships should pause for a while instead of trying to earn a few pennies in the next few months and get a bad reputation in return.

 

Are there very many public institutions or companies in recent years that have had their reputations not adversely affected?  By Covid or otherwise?  

 

2022 may be the year when we realize that a different "mind set" is needed.  Is what we are experiencing the "new normality"?  God knows, I hope not.  Some of us seems to have accepted this possibility.  I don't make New Year resolutions.  But, I think that I need to better accept the reality that currently exists than I have.  

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19 hours ago, AmazedByCruising said:

I keep my hopes up for June, July maybe. Summer is always good, we know that already. But by then, Omicron will have burned through society, boosting all of the infected in its path. I'm not a virologist, but I guess that at worst, a new variant shows up for which our immune systems aren't prepared by either vaccines or Omicron. 

 

Wall Street must be sharing your optimism and hope.  Look below, from the Wall Street Journal this am, as to how much the share values for Royal Caribbean have shot UP and UP.  Very dramatic.  Carnival is up nearly 3% this morning and Norwegian nearly 2% in early trading today.  

 

Is this positive movement and guessing?

 

THANKS!  Enjoy!  Terry in Ohio   

 

Venice: Loving It & Why??!!  Is one of your future desires or past favorites? See these many visual samples for its great history and architecture.  This posting is now at 93,483 views.

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58 minutes ago, TLCOhio said:

Wall Street must be sharing your optimism and hope.  Look below, from the Wall Street Journal this am, as to how much the share values for Royal Caribbean have shot UP and UP.  Very dramatic.  Carnival is up nearly 3% this morning and Norwegian nearly 2% in early trading today.  

 

Is this positive movement and guessing?

 

CCL is up 6.5% now, the year has started well for me 🙂 

Could it be that a bit too many shorted CCL? 

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Posted (edited)
1 hour ago, AmazedByCruising said:

CCL is up 6.5% now, the year has started well for me 🙂 Could it be that a bit too many shorted CCL? 

 

Great above question and follow-up from our Dutch friend as to "short-selling" that is way, way above my pay grade and expertise to evaluate and understand.  As they often say . . . time will tell!!??  

 

From USA Today early this afternoon, they had this headline: “Richard Fain, Royal Caribbean Group CEO, steps down from CEO position after 33 years” with these key story highlights: “Richard Fain, CEO of Royal Caribbean Group, the parent to Royal Caribbean International, Celebrity Cruises, Silversea Cruises, stepped down at midnight on Monday after three decades in the role. Fain, who is set to remain chair of the company's board of directors, is the third longest-serving CEO among S&P 500 leaders.  In 1988, when Fain stepped into the role, Royal Caribbean was a solo brand with five ships sailing to Bermuda and the Caribbean with 2,700 employees. By the time of his decided departure in 2021, Royal Caribbean Group had evolved into a five-brand company with 60 ships sailing to more than 800 destinations on all seven continents and another 13 ships on order, employing 85,000 people globally.”

 

That's a pretty significant record of amazing growth!    Plus, many service and design innovations, too!  What will happening in the next five or ten years with Royal Caribbean and/or the overall cruise industry?

 

Full story at:

https://www.usatoday.com/story/travel/cruises/2022/01/03/royal-caribbean-richard-fain-steps-down/8908262002/

 

THANKS!  Enjoy!  Terry in Ohio   

 

Amazon River-Caribbean 2015 adventure live/blog starting in Barbados. Many visuals from this amazing river and Caribbean Islands (Dutch ABC's, St. Barts, Dominica, Grenada, San Juan, etc.).  Now at 69,211 views:

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5 hours ago, TLCOhio said:

Is this positive movement and guessing?

 

It may be due to investors adjusting their portfolios.  There were many "down days" for the cruise line stocks this Fall when investors were selling more than others were buying.  Now that their 30 day wash sale rule has expired and with more positive news about Omicron being less virulent, those who had sold (maybe for tax purposes during late 2021) are now buying.  That's my guess.  

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18 hours ago, rkacruiser said:

It may be due to investors adjusting their portfolios.  There were many "down days" for the cruise line stocks this Fall when investors were selling more than others were buying.  Now that their 30 day wash sale rule has expired and with more positive news about Omicron being less virulent, those who had sold (maybe for tax purposes during late 2021) are now buying.  That's my guess.  

 

Appreciate this excellent speculation and follow-up from our SW Ohio neighbor.  As shown below, Royal Caribbean's stock continues to go up, UP this morning.  Good news?  The financial experts apparently see "sunnier skies" ahead?  

 

From the Wall Street Journal this morning, they had this press release headline: “Royal Caribbean Group announces proposed offering of senior unsecured notes” with these highlights:Royal Caribbean Group today announced that it has commenced a private offering of $700,000,000 aggregate principal amount of senior unsecured notes due 2027 to be issued by the Company.  The Company intends to use the proceeds from the sale of the Notes to repay principal payments on debt maturing in 2022.

 

Later in this company press release, they note: "In addition, many of these risks and uncertainties are heightened and will continue to be heightened, or in the future may be heightened, by the COVID-19 pandemic. It is not possible to predict or identify all such risks."

 

Wow!  That total of 700 million dollars is almost like, nearly a billion.  More cash to sustain the company for a Covid challenge that is going on much longer than originally had been hoped or expected?  Am I guessing correctly?

 

Full story at:

https://www.wsj.com/articles/royal-caribbean-group-announces-proposed-offering-of-senior-unsecured-notes-01641304479?tesla=y

 

THANKS!  Enjoy!  Terry in Ohio

 

AFRICA?!!?: Fun, interesting visuals, plus travel details from this early 2016 live/blog. At 52,079 views. Featuring Cape Town, South Africa’s coast, Mozambique, Victoria Falls/Zambia and Botswana's famed Okavango Delta.

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From the Wall Street Journal today, here is their chart for the mid-morning value upswing of the Royal Caribbean stock.:

(Open your screen/viewer wider to see this visual larger/better!)

1552629462_ScreenShot2022-01-04at10_14_35AM.thumb.png.a847f25c942707fed663f17490527f57.png

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6 hours ago, TLCOhio said:

Wow!  That total of 700 million dollars is almost like, nearly a billion.  More cash to sustain the company for a Covid challenge that is going on much longer than originally had been hoped or expected?  Am I guessing correctly?

 

No, it doesn't sound like it. It's not more cash; they're just trading debt for other debt — in this case, loans due in 2022 replaced by loans due in 2027. It makes sense on two counts: (1) they don't have enough positive cash flow to pay off the loans due this year from cash from operations, and (2) interest rates are still low and will be rising, so locking in 5 more years at a relatively low rate gives them time to rebuild revenues and positive cash flow. 

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6 hours ago, TLCOhio said:

Royal Caribbean Group today announced that it has commenced a private offering of $700,000,000 aggregate principal amount of senior unsecured notes due 2027 to be issued by the Company.  The Company intends to use the proceeds from the sale of the Notes to repay principal payments on debt maturing in 2022.

 

Borrowing money to repay borrowed money.  Humm.  And, at what interest rate?  Since interests rates are starting to s-l-o-w-l-y creep upwards, my guess is that these new notes will be sold with a higher interest rate than the debt being paid.  

 

The Market seemed not to be concerned since RCI was up 5.11% at the close.  

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According to Bloomberg they are actually reducing the debt cost.  Yes interest rates are higher but the credit spread RCL pays over Treasuries is more consequential.   Given the large amount of debt RCL holds if this "Junk" deal is successful it would have a positive impact on the stock price.

 

The stock market certainly isn't always correct but at times its clairvoyant and what its telling us right now is that even tho the US had 1 million cases of Covid today we may be ok.   We can only hope, I'm tired of this crap.

 

https://www.bloomberg.com/news/articles/2022-01-04/royal-caribbean-selling-700-million-of-bonds-to-repay-debt

Edited by RetiredandTravel
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24 minutes ago, RetiredandTravel said:

According to Bloomberg they are actually reducing the debt cost.  Yes interest rates are higher but the credit spread RCL pays over Treasuries is more consequential.   Given the large amount of debt RCL holds if this "Junk" deal is successful it would have a positive impact on the stock price.

 

The stock market certainly isn't always correct but at times its clairvoyant and what its telling us right now is that even tho the US had 1 million cases of Covid today we may be ok.   We can only hope, I'm tired of this crap.

 

https://www.bloomberg.com/news/articles/2022-01-04/royal-caribbean-selling-700-million-of-bonds-to-repay-debt

This is the game the big kids play. I would never buy any junk bonds, especially at 5.35%. Maybe that is why I am not a big kid!!

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10 minutes ago, A Tucson Guy said:

This is the game the big kids play. I would never buy any junk bonds, especially at 5.35%. Maybe that is why I am not a big kid!!

 

 

The big kids that invest in this stuff do extensive analysis and prioritize their legal rights.  I agree for most of us a well managed diversified mutual fund makes more sense.

 

 

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2 minutes ago, RetiredandTravel said:

The big kids that invest in this stuff do extensive analysis and prioritize their legal rights. 

 

Yes, and this is a private offering so buyers have to pass some vetting to participate. Probably it'll be almost all institutional investors for mutual funds, ETFs, etc.

 

And, except for some rounding, there isn't likely to be much new money here since they disclosed it as a refinance. I admit to not having looked at the deal, though. 

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15 hours ago, cruiseej said:

No, it doesn't sound like it. It's not more cash; they're just trading debt for other debt — in this case, loans due in 2022 replaced by loans due in 2027. It makes sense on two counts: (1) they don't have enough positive cash flow to pay off the loans due this year from cash from operations, and (2) interest rates are still low and will be rising, so locking in 5 more years at a relatively low rate gives them time to rebuild revenues and positive cash flow. 

 

YES, appreciate these various insights, comments and follow-ups about these re-finance steps/tactics by Royal Caribbean. But, wait, there is more to this story.  Why go for only $700 million when you get a full billion dollars??

 

From the Wall Street Journal yesterday, they had this headline: Royal Caribbean Group announces upsizing and pricing of $1,000,000,000 senior unsecured notes on a company press release with these highlights:Royal Caribbean Group  today announced that it has priced its private offering of $1,000,000,000 aggregate principal amount of 5.375% senior unsecured notes due 2027. The aggregate principal amount of Notes to be issued was increased to $1.0 billion. The Notes will mature on July 15, 2027. The Notes are expected to be issued on or around January 7, 2022, subject to customary closing conditions.  The Company intends to use the proceeds from the sale of the Notes to repay principal payments on debt maturing in 2022. Pending such uses, the Company may temporarily apply the proceeds to repay borrowings under its revolving credit facilities or other borrowings.

 

Clearly the new Royal Caribbean CEO (who was the CFO) is showing his financial focus with this quick move.  My reaction?  If RCL can get a billion dollars placed this quickly, privately, there is a reasonable degree of "confidence" by Wall Street types that this Covid mess will be turning in the near future.  

 

Full company PR release at:

https://www.wsj.com/articles/royal-caribbean-group-announces-upsizing-and-pricing-of-1-000-000-000-senior-unsecured-notes-01641334267?tesla=y

 

THANKS!  Enjoy!  Terry in Ohio

 

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10 hours ago, TLCOhio said:

Clearly the new Royal Caribbean CEO (who was the CFO) is showing his financial focus with this quick move.  My reaction?  If RCL can get a billion dollars placed this quickly, privately, there is a reasonable degree of "confidence" by Wall Street types that this Covid mess will be turning in the near future.  

 

I agree.  Maybe it is another indication that I think I am detecting that our society is beginning to learn to live with this darn virus.  

 

5.375%:  I would be interested in earning such a rate!  

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On 1/5/2022 at 7:25 PM, rkacruiser said:

I agree.  Maybe it is another indication that I think I am detecting that our society is beginning to learn to live with this darn virus.  5.375%:  I would be interested in earning such a rate!  

 

Great above comments from our Dayton-area neighbor.  YES, learning to live it is the current challenge, even if many do not want to admit it and shift gears/directions.  Agree that 5.375% is a decent return, but the question involves . . . at what level of risk . . .  versus , , , guaranteed security??  Good questions to consider??!!

 

2087853069_ScreenShot2022-01-07at4_26_43PM.thumb.png.f7531a46e630349381110d8ea5a53e59.png

 

Above from Bing.com is a picture from Cedar Point's Lake Erie amusement park in Ohio that is famed for its many roller coasters. Why?  Look at the charts below to reflect this past week's wild ride on Wall Street for the three major cruise ship companies.  Have things this week been jumpy and varied without any clear direction?  Isn't that like a roller coaster ride?  Can we call it a "Dollar Coaster" thrill experience?

 

Royal Caribbean started on Monday at $78, went back up to $83.40 Wednesday morning, then back down to $78 late Thursday afternoon and then up again to $81 at Friday afternoon's closing.  Unpredictable without any clear, specific and understandable pattern or reason?  What are your explanations and speculation? 

 

THANKS!  Enjoy!  Terry in Ohio

 

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From the Wall Street Journal today, here are their charts for the varied swings of the Royal Caribbean and the other two major cruise ship stocks during the most recent five trading days.:

(Open your screen/viewer wider to see this visual larger/better!)

1162571786_ScreenShot2022-01-07at4_18_45PM.thumb.png.06efcd756a8414859708cf9360dc2d8d.png

 

188797793_ScreenShot2022-01-07at4_20_15PM.thumb.png.316755c00a1ec6292db7b7081e9a13b1.png

 

1864775157_ScreenShot2022-01-07at4_21_02PM.thumb.png.a68419926c84d9d0c5b989c66a714ded.png

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On 1/5/2022 at 12:01 AM, CruiserFromMaine said:

 

Yes, and this is a private offering so buyers have to pass some vetting to participate. Probably it'll be almost all institutional investors for mutual funds, ETFs, etc.

 

Why would they do that? I mean, if A loans money to B, I suppose A should check B if he can pay back. Not B checking A to see if.. what? If it's not fake money? 

 

Too much hassle if small investors want to join?  

 

On 1/6/2022 at 1:25 AM, rkacruiser said:

I agree.  Maybe it is another indication that I think I am detecting that our society is beginning to learn to live with this darn virus.  

 

5.375%:  I would be interested in earning such a rate!  

 

Just buying stock is 3.94% / day. Well, today. Maybe not tomorrow 🙂

 

I believe their are only two options.

 

1) The pandemic ends or somehow it doesn't matter anymore (it's safer at sea than on land, for instance) so people will buy cruises like it's 2019.  2022 is long enough to decide if option 1 comes true.

 

2) The pandemic is here to stay and gets worse. A new variant is so bad that 1 in 100 end up in ICU. CDC decides that cruises without at least 1 ICU bed for every 80 pax and crew are forbidden, and obviously no ship can offer that. (No country either, but OK). 1/1/2023 all ships stop sailing. The cruise lines only own ships, and everything else (brand, know-how, private island leases) is worth nothing. Maybe someone wants one to use one as a hotel, but a ship that once cost $1 billion won't be worth much more than its weight in steel. 

 

 

If the odds for #2 are bigger than 5%, 5.375% is not a good rate. When the ships are useless, selling all assets cannot even pay a billion. If that was the only loan.

 

If the odds for #2 are smaller than 5%, it's not a bad deal compared to bonds or whatever. But if all of your analysis say that it's at least 95% sure that the cruise lines won't be bankrupt in a year or so, why would you use your money for a loan? There are $22 CCL stocks for sale that have an intrinsic (non-Covid) 2019 value of $50. If they are $24 by 1/1/2023 that's more than 5.375%. So it's still a bad deal IMHO.

 

Then again, if I'm so smart, why don't I have a billion to lend to RCCL.😄

 

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2 hours ago, TLCOhio said:

but the question involves . . . at what level of risk . . .  versus , , , guaranteed security??  

 

If one chooses to be an investor, then one must assume whatever level of risk with which they are comfortable.  Guaranteed security?  Chase Bank in my area offers a FDIC savings account of 0.03% interest with the appropriate large deposit in such an account.  

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4 minutes ago, AmazedByCruising said:

Then again, if I'm so smart, why don't I have a billion to lend to RCCL.😄

 

😁    And, why did I not add to my positions in the companies that I hold which have been so successful?  I know what I was thinking when I did so, but my purchase of JCP as it was declining proved to be not the best financial decision that I have ever made.  

 

That darn crystal ball!  It has been in for repair for so many years even before the supply chain issues that seem to keep it from being repaired.  😁

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3 minutes ago, rkacruiser said:

Chase Bank in my area offers a FDIC savings account of 0.03% interest with the appropriate large deposit in such an account.  

 

Jealous.. Appropriate large accounts (> 100K Euro) in Holland have a negative interest. I'm investing and literally withdrawing money to escape from that.

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6 minutes ago, AmazedByCruising said:

 

Jealous.. Appropriate large accounts (> 100K Euro) in Holland have a negative interest. I'm investing and literally withdrawing money to escape from that.

 

☹️    Considering what our inflation rate currently is, there is not much "good news" in such a FDIC bank interest rate.  

 

 

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6 minutes ago, rkacruiser said:

 

😁    And, why did I not add to my positions in the companies that I hold which have been so successful?  I know what I was thinking when I did so, but my purchase of JCP as it was declining proved to be not the best financial decision that I have ever made.  

 

That darn crystal ball!  It has been in for repair for so many years even before the supply chain issues that seem to keep it from being repaired.  😁

 

My Alibaba ball was broken when it arrived. So now my entire portfolio is based on important things, in my case vacation preferences. If the CCL goes bankrupt, I can't cruise anyway so no harm done. It they don't that's good AND I can afford it. Win-win.

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16 hours ago, rkacruiser said:

If one chooses to be an investor, then one must assume whatever level of risk with which they are comfortableGuaranteed security?  Chase Bank in my area offers a FDIC savings account of 0.03% interest with the appropriate large deposit in such an account.  

 

Good and interesting multiple comments and follow-ups from our Dutch and Ohio friends.  In case any of us had an extra billion dollars sitting around and we were waiting to to loan it to Royal Caribbean, sorry, it is too late.  As saying goes, we missed that boat!!

 

From the Wall Street Journal late yesterday, they had this headline from a company PR release: Royal Caribbean Group announces closing of senior unsecured notes offering with these highlights:Royal Caribbean Group today announced that it has closed its private offering of $1,000,000,000 aggregate principal amount of 5.375% senior unsecured notes due 2027. The Company expects to use the net proceeds from the offering of the Notes to repay principal payments on debt maturing in 2022. Pending such uses, the Company may temporarily apply the proceeds to repay borrowings under its revolving credit facilities or other borrowings.”

 

Full story at:

https://www.wsj.com/articles/royal-caribbean-group-announces-closing-of-senior-unsecured-notes-offering-01641590938?tesla=y

 

THANKS!  Enjoy!  Terry in Ohio

 

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