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.
- 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.
