RCL trying new bond offering

[BP99]

The Canadian Pension Plan (CPP) invested 1 Billion into RCL last year.

Lost about $750 million so far. Luckily for Pensioners that was only

a small portion of our fund. CPP is somewhat like Social Security in USA.

We pay into it when we work but it's definitely not enough to survive on 

if it's you only source of money.

[Bo1953]

1 hour ago, TeeRick said:

At first blush sounds very appealing.  But would you really want everybody here on CC criticizing Denny Cruise Lines for every little thing that happens and making nasty comments about everything you do and say?  I will pass on giving you cash for this but good luck anyway!

t -  many of us can weather the comments, the hypercritical's cannot though! LOL

 

bon voyage

[The_Big_M]

That debt was only taken out in March. Lender had cold feet pretty quickly.

[npcl]

8 minutes ago, The_Big_M said:

That debt was only taken out in March. Lender had cold feet pretty quickly.

Don't think it was any change from the lender.  It was always a short term loan designed to support operational cash flow.  So it makes sense to replace 1 year debt, with longer term debt.

[kenevenpar]

2 hours ago, BP99 said:

The Canadian Pension Plan (CPP) invested 1 Billion into RCL last year.

Lost about $750 million so far. Luckily for Pensioners that was only

a small portion of our fund. CPP is somewhat like Social Security in USA.

We pay into it when we work but it's definitely not enough to survive on 

if it's you only source of money.

Unless they sold the investment, they haven't lost anything, yet.

[Baron Barracuda]

11 minutes ago, kenevenpar said:

Unless they sold the investment, they haven't lost anything, yet.

 

DW tries to use same logic on me.  I believe in mark to market.  Value of RCL is what I can buy or sell it at right now.  Market says that $750MM is gone to money heaven.

[Doubt It]

4 hours ago, Bo1953 said:

I second that, this way those of us who wish to sail may have a better and enhanced experience with a 'voluntary' reduction in passengers... which will go a long way towards 'improved' passenger current and future behaviour, too!
 

Great suggestion, I can only presume you are boycotting all cruise lines, until???

 

Although I do not use the outdoor pools, yet that could portend fewer chair hogs! LOL

 

bon voyage

 

Hi there Bo1953.

 

Don't anticipate a cruise in the near or beyond future. Got myself a new Porsche Cayenne and seeing Canada and the USA in detail. Got to have more biscuits for goodness sakes! Got to go back to the Love Less Cafe south of Nashville.

 

I need authentic geography, people, food - not the increasingly fake/manipulated cruise experience.

 

"Time is precious and it is slipping away" - Ricky Martin and Christina Augilera, "No body wants to be lonely".

 

Don't plan to spend the limited time left dealing with the complexities of future cruising. I love Globus Tours which deliver on real life and other options. Cruising is too isolating and has limited resourcing for health issues etc.

 

But Bo1953, to each their own!

 

 

[kenevenpar]

3 minutes ago, Baron Barracuda said:

 

DW tries to use same logic on me.  I believe in mark to market.  Value of RCL is what I can buy or sell it at right now.  Market says that $750MM is gone to money heaven.

My investments took a significant hit.  I did not sell them, and the value has mostly returned.  So, I did not lose the big hit, as there was no sale.

 

I do get your point, but if a long term holder, you have a different perspective.  I have no knowledge of the pension's investment strategy. 

[Bo1953]

1 minute ago, Doubt It said:

Hi there Bo1953.

 

Don't anticipate a cruise in the near or beyond future. Got myself a new Porsche Cayenne and seeing Canada and the USA in detail. Got to have more biscuits for goodness sakes! Got to go back to the Love Less Cafe south of Nashville.

 

I need authentic geography, people, food - not the increasingly fake/manipulated cruise experience.

 

"Time is precious and it is slipping away" - Ricky Martin and Christina Augilera, "No body wants to be lonely".

 

Don't plan to spend the limited time left dealing with the complexities of future cruising. I love Globus Tours which deliver on real life and other options. Cruising is too isolating and has limited resourcing for health issues etc.

 

But Bo1953, to each their own!

 

 

d - I, for one, appreciate your approach to it all....

 

bon voyage

[az_tchr]

4 hours ago, npcl said:

Don't think it was any change from the lender.  It was always a short term loan designed to support operational cash flow.  So it makes sense to replace 1 year debt, with longer term debt.

Absolutely.  RCCL took out a 365 day credit line - not renewable.  Speculate they wanted to make their balance sheet and cash position look good.  This type of "loan" can be accompanied in a day or two.  Truly needed something more permanent.

[mahdnc]

A Bloomberg Business article detailing the bond offering: Behind Royal Caribbean’s Lifeline, a Shrewd Bond Market Maneuver

 

It was published this afternoon.  If you don't have a subscription, the website usually allows you a few free articles per month.

 

Here is an excerpt containing the first few paragraphs:

 

Royal Caribbean Cruises Ltd. was in a quandary.

 

The company needed to raise money while its ships were docked amid the Covid-19 pandemic, and the bond market was open if Royal Caribbean was willing to mortgage ships as collateral. Similar deals had worked for rivals like Viking Cruises and Norwegian Cruise Line Holdings Ltd.

 

Royal Caribbean had plenty of ships to offer. The problem? S&P Global Ratings had slashed its credit grade to junk, and the cruise company was expecting Moody’s Investors Service to follow. With those downgrades came steep restrictions on how much of its assets could be pledged to bondholders. The firm knew it needed more than the $1.66 billion of secured debt it would be permitted to raise to get through the crisis.

 

Miami-based Royal Caribbean ultimately found a new structure that would let it sell more than $3 billion of debt linked to ships without running afoul of restrictions known as covenants embedded in its existing debt documents. It sold half of the debt as a traditional secured offering, and gave investors priority guarantees in the form of ship stock pledges for the rest.

[Ride-The-Waves]

And who do you think is going to pay for this added debt?  Santa Claus?

 

For too long now cruise lines have been building larger and more expensive ships.  Stuffing more passengers in smaller cabins, taking away public spaces to add cabins, and in general increasing the nickel and dimming of passengers.  Now they are adding new massive debt - junk bond level - which they likely cannot pay from even wildly expected recovery.  Mortgaging the future for current profit and viability never works.  Something has got to give: significantly higher prices and fees, fewer passengers, fewer ships, less staff/crew are just a few things that come to mind.  All of which are detriments to getting existing passengers back on board and attracting new passengers.  

 

"Cruising" is going to need to develop a new business model.  The old/current one will not carry over into the future.  Higher prices for sure.  Maybe back to smaller/medium sized ships.  More focus on the well-off cruiser and away from "packing them in" which doesn't work in a social distancing world.  It will be interesting to see how all these facets come together...