Carnival Corp. (NYSE: CCL) Cruise has added about another $1 billion to its already hefty $7 billion debt due to the coronavirus pandemic. It's no secret that the pandemic has hit all travel companies hard, from flights to tours, but it seems Carnival is a sinking ship when compared to parts of the tourism industry.
While Carnival holds the prestigious title of being the largest cruise group on the world, a fleet of ships to maintain comes at a price when their revenue income dries up. They expect to burn through $650 million a month, every month, until the end of 2020.
To combat the pandemic and its repercussions, Carnival has been trying to sell its stock to investors both domestic and international. On the euro, potential investors have suggested a yield of about 10.5%, and a slightly higher 11% yield on the dollar. Unfortunately, the yield on the dollar has dropped 0.9% from the bond offering in April. While the company was able to sell $4 billion in bonds in April, Carnival is still forced to use the international credit market just to keep money flowing.
This latest sell off comes just a month after Carnival to raised $2.8 billion in loans in both dollars and euros. According to Bloomberg, investors who buy the new debt could be behind in getting paid, since those who have bought the previous $7 billion are first in line to get their investment back if the company runs into trouble down the line.
While Carnival, and most other cruise lines, work to keep their fleets afloat, the U.S. Centers for Disease Control & Prevention (C.D.C) has been working towards giving them the green light to start sailing again. Last week, Norwegian Cruise Line (NYSE: NCLH) and Royal Caribbean (NYSE: RCL) submitted a report to the C.D.C. that provided a set of health and safety protocols that the cruise lines plan to issue moving forward. The tourism industry is waiting for the C.D.C. to decide, and some think that the go ahead to start cruising again might come sooner rather than later.