Royal Caribbean Cruises Makes Euro Bond Market Debut

Royal Caribbean Cruises Ltd made its euro bond market debut selling a bigger-than-expected one-billion-euro ($1.30 billion) bond after drawing keen investor interest.

The company priced an offering of euro one billion of its 5.625 percent Senior Notes due 2014 at a price of 99.638 percent. The net proceeds of the offering are intended to be used to refinance short-term debt incurred in connection with the acquisition of Pullmantur S.A., and the balance for general corporate purposes.

According to Reuters, James Foster, a fund manager at Artemis Investment Management in London, said the deal had benefited from “change-of-control” provisions protecting buyers from a debt-heavy leveraged buyout (LBO).

“People are all neurotic about LBOs, and not surprisingly, because they’re happening all the time, so I don’t blame them,” reportedly said Mr. Foster, who placed orders for the bond.

Mr. Foster said Royal Caribbean’s high operational gearing was balanced by the fact it needed to keep access to debt markets open to finance the purchase of new cruise ships.

Royal Caribbean spokesman Greg Johnson said the surplus €300 million raised would be used for “general corporate purposes” and it was “certainly a possibility” this debut euro bond could be followed by more.