Royal Caribbean Announces Note Offering
What happened
Royal Caribbean Group announced it has commenced a public offering of senior unsecured notes. The company stated it intends to use the net proceeds from the sale to refinance its existing debt obligations.
Why it matters
- This move is consistent with the company's broader strategy of refinancing higher-cost debt that was taken on during periods of market volatility. For example, in February 2024, the company issued $1.25 billion in notes at 6.25% to help redeem notes that carried an 11.625% interest rate. - The offering comes on the heels of significant credit rating upgrades. In early 2026, Moody's upgraded Royal Caribbean's senior unsecured rating to Baa2, and S&P Global Ratings raised its corporate rating to BBB-, officially moving it into investment-grade territory. - Improved credit ratings are a direct result of strong financial performance and a healthier balance sheet. The company's management has a stated goal of maintaining a total adjusted debt-to-EBITDA ratio between 3x and 3.5x. - As of the end of 2025, Royal Caribbean's ratio of Adjusted EBITDA to net interest expense was approximately 7.08x, indicating a much stronger ability to cover its interest payments compared to previous years. - The company's recent financial results have been strong, with 2023 earnings per share at $6.31 and an adjusted EPS of $6.77, which surpassed guidance due to high demand. Projections for 2024 indicated continued growth, with an expected adjusted EPS in the range of $9.50 to $9.70. - This offering is part of a larger pattern of managing upcoming debt maturities. The company has explicitly targeted the refinancing of notes coming due in 2026, which carry coupon rates of 4.250% and 5.500%. - Proceeds from similar past offerings have also been used to fund new growth projects. A $1.5 billion note offering in late 2025 was used to finance the delivery of the new ship *Celebrity Xcel* in addition to refinancing existing debt.
Key numbers
- For example, in February 2024, the company issued $1.25 billion in notes at 6.25% to help redeem notes that carried an 11.625% interest rate.
- In early 2026, Moody's upgraded Royal Caribbean's senior unsecured rating to Baa2, and S&P Global Ratings raised its corporate rating to BBB-, officially moving it into investment-grade territory.
- The company's management has a stated goal of maintaining a total adjusted debt-to-EBITDA ratio between 3x and 3.5x.
- As of the end of 2025, Royal Caribbean's ratio of Adjusted EBITDA to net interest expense was approximately 7.08x, indicating a much stronger ability to cover its interest payments compared to previous years.
What happens next
- Projections for 2024 indicated continued growth, with an expected adjusted EPS in the range of $9.50 to $9.70.
Quick answers
What happened in Royal Caribbean Announces Note Offering?
Royal Caribbean Group announced it has commenced a public offering of senior unsecured notes. The company stated it intends to use the net proceeds from the sale to refinance its existing debt obligations.
Why does Royal Caribbean Announces Note Offering matter?
This move is consistent with the company's broader strategy of refinancing higher-cost debt that was taken on during periods of market volatility. For example, in February 2024, the company issued $1.25 billion in notes at 6.25% to help redeem notes that carried an 11.625% interest rate. The offering comes on the heels of significant credit rating upgrades. In early 2026, Moody's upgraded Royal Caribbean's senior unsecured rating to Baa2, and S&P Global Ratings raised its corporate rating to BBB-, officially moving it into investment-grade territory. Improved credit ratings are a direct result of strong financial performance and a healthier balance sheet. The company's management has a stated goal of maintaining a total adjusted debt-to-EBITDA ratio between 3x and 3.5x. As of the end of 2025, Royal Caribbean's ratio of Adjusted EBITDA to net interest expense was approximately 7.08x, indicating a much stronger ability to cover its interest payments compared to previous years. The company's recent financial results have been strong, with 2023 earnings per share at $6.31 and an adjusted EPS of $6.77, which surpassed guidance due to high demand. Projections for 2024 indicated continued growth, with an expected adjusted EPS in the range of $9.50 to $9.70. This offering is part of a larger pattern of managing upcoming debt maturities. The company has explicitly targeted the refinancing of notes coming due in 2026, which carry coupon rates of 4.250% and 5.500%. Proceeds from similar past offerings have also been used to fund new growth projects. A $1.5 billion note offering in late 2025 was used to finance the delivery of the new ship *Celebrity Xcel* in addition to refinancing existing debt.
