Why did Royal Caribbean stock drop today? Raising new funds to pay off debt rattled investors

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Royal Caribbean Cruises Ltd. (NYSE:RCL) fell 8.76% on Monday after the cruise line operator fired off a new private offering of $900M senior convertible notes due 2025.

The initial purchasers were also granted an option to purchase up to an additional $135M of convertible notes.

RCL said the purpose of the offering is to replace some of the existing near-term maturities of convertible bonds with new longer-term convertible bonds in a manner which is non-dilutive to shareholders. The company intends to use the proceeds to repurchase a portion of its 2.875% convertible senior notes due November 15, 2023 and 4.25% convertible senior notes due June 15, 2023.

Royal Caribbean Group (RCL) also made news on Monday by announcing that it will no longer require pre-embarkation COVID testing for vaccinated passengers on cruises of five days or less. The new policy will begin on August 8.

The Seeking Alpha Quant Rating on RCL is Strong Sell and the score of 1.36 is in the bottom 4% of the stocks rated.