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Royal Caribbean Pays More Than 11% on Bond to Refinance Debt

  • Offering was increased to $1.25 billion from $1 billion
  • Rally in credit has triggered a refinancing issuance spree
The Royal Caribbean Cruises Freedom of the Seas ship in Miami, Florida.

The Royal Caribbean Cruises Freedom of the Seas ship in Miami, Florida.

Photographer: Eva Marie Uzcategui/Bloomberg

Royal Caribbean Group, buffeted by pandemic-related business obstacles, paid more than 11% on a $1.25 billion junk-bond deal following a rally in credit that’s provided an opportunity for companies to refinance debt.

The arrival of Covid-19 in 2020 shut down the cruise business, and Royal Caribbean loaded up on debt after the Federal Reserve slashed interest rates to help companies survive. Now the Fed is raising rates to stem inflation, and the cost of borrowing has increased broadly amid fears of a recession and geopolitical risks from the Russia-Ukraine war.