Royal Caribbean International
Investment evaluation
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Royal Caribbean
Business was booming before Covid-19 and ocean liners were often in demand as an experiential summer holiday.
The CEO of Royal Caribbean stated in an interview that the company is experiencing very strong bookings for 2021 and the end of 2020. As part of the pandemic, the company's business was stopped and the company increased its capital by issuing new bonds (it did not need to be financed by the state) . From our point of view, a question mark hangs over future profitability, whether it will return to 30%, 50%, 80% of the pre-Covid-19 value. How to correctly price shares is therefore complicated at the moment, and they are therefore particularly suitable for speculative trading. However, from the creditor's point of view, in our opinion, the bankruptcy of the company, and therefore the risk for bondholders, is completely "off the table".
Complete information
Issuer
Royal Caribbean Cruises Ltd.
The name of the issue
Royal Caribbean Cruises, 3.7% 15Mar2028
Currency
US dollar $
Emission volume
500,000,000 USD
The face value of the bond
1000 USD
Indicative market price
600 USD
Discount
360 USD
Coupon from face value
3.70% p.a
Coupon payout frequency
Due date
Quarterly payment
15/03/2028
100% liquidity
Yes
Minimum volume
$100,000
Yield to Maturity
9.37% pa - before taking into account all costs
Preferred scenario
42.06% pa - before taking into account all costs
Rating
BB
Hierarchy of debt
Senior uninsured
You can find the prospectus for the bonds here:
3.700% Senior Notes Due 2028 - Prospectus
Management and outlook of the company
~
Bond summary
Given that the bond was trading at $1030 before Covid-19, when Fed rates were 2% and now at 0%, we expect the bond price to return to above $1000 within 1 year , once the market realizes that the bonds are not at risk and this imbalance is arbitrated. The bond rating is still BB (Sazka BB-).