Coronavirus: Carnival shares sink as cruise operator raises equity
Cruise ship owner Carnival saw its shares sink over 8 per cent this morning after the firm said it had raised new equity at a higher cost than expected as the firm covers itself against the coronavirus disruption.
Although its cruise ships are currently moored due to extensive restrictions on travel, the firm managed to raise $6.25 billion by issuing new debt and equity.
However, the new funding came at a price. In a statement, the firm said Carnival priced $4bn in bonds maturing in 2023 – higher than the $3bn originally planned – with a yield of 11.5 per cent.
In October, by contrast, the firm paid a yield of one per cent on a €600m loan from the European debt market.
Beyond the bond issues, Carnival also issued new stock to raise $500m, less than the $1.25bn it had previous aimed for, at a price of $8 per share.
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The company said the new funding would be sufficient to cover its existing financial obligations until next year.
On Monday the firm extended the suspension of all cruises run by its Cunard subsidiary for another month, meaning the firm will not operate any sailings until 15 May at the earliest.
However, there is considerable doubt as to whether cruises will be able to operate again by that time, due to the quickening spread of the virus.
Fellow cruise operator Saga today warned that it might have to suspend all of its sailings until 2021, with the firm’s elderly customers the most at risk from the disease.
Saga is also due to restart sailings in June, but CMC markets analyst David Madden said: “With the way things are going in terms of lockdowns, the firm might have to push back the date to resume service”.