npcl Posted April 28, 2020 #51 Share Posted April 28, 2020 4 hours ago, TeeRick said: But apparently Carnival did benefit in getting their loans backed by the US Fed bailout. https://www.dailymail.co.uk/news/article-8262745/Carnival-Cruise-Line-raised-6billion-financing-Fed-intervened-save-businesses.html That entire article is a bit false. Carnival did not get their loans backed by the Fed. What happened is the entire bond market was seizing up and the Fed moved to keep the bond market liquid. Otherwise the entire economy would crash, because no company, no matter how good their credit would have been able to borrow. In doing so Carnival, a company needing to borrow, was able to access the market for its bond offering at 12%, the same as thousands of other businesses. The fed did nothing special for Carnival. There was nothing in the feds action that was aimed at Carnival, and the fed most certainly has not backed Carnivals bonds. Link to comment Share on other sites More sharing options...
npcl Posted April 28, 2020 #52 Share Posted April 28, 2020 40 minutes ago, Baron Barracuda said: Here's WSJ take on what happened. Synopsis: Deteriorating financials prevented CCL from accessing public debt market forcing them to explore borrowing from vulture hedge funds at rates around 15%. They were spared however when Federal Reserve propped up bond market by making open market purchase of investment grade corporate debt (hard to believe but CCL at bbb- is still investment grade credit). This caused bond market to stabilize and allowed CCL to float their $6B public offerings. Fed did not do this explicitly for CCL, they just benefited along with other investment grade credits. https://www.wsj.com/articles/how-fed-intervention-saved-carnival-11587920400 Carnival's bond offering was in the junk range, not even investment grade. Link to comment Share on other sites More sharing options...
Baron Barracuda Posted April 28, 2020 #53 Share Posted April 28, 2020 3 hours ago, npcl said: Carnival's bond offering was in the junk range, not even investment grade. New CCL debt was rated bbb- by Moody's. That's still investment grade. Has not been downgraded since. RCL however was downgraded recently to BB (junk). Link to comment Share on other sites More sharing options...
npcl Posted April 28, 2020 #54 Share Posted April 28, 2020 1 hour ago, Baron Barracuda said: New CCL debt was rated bbb- by Moody's. That's still investment grade. Has not been downgraded since. RCL however was downgraded recently to BB (junk). Their rating is just above junk, but the loan interst rate was junk level, regardless of rating. Link to comment Share on other sites More sharing options...
Recommended Posts
Please sign in to comment
You will be able to leave a comment after signing in
Sign In Now