What happened

Shares of Royal Caribbean Cruises (NYSE:RCL) climbed more than 6% on May 15, following news of the company's debt offering earlier in the week.

So what 

Royal Caribbean raised $3.32 billion in senior secured notes on May 13. The much-needed cash comes at a steep cost. Royal Caribbean will pay a 10.875% interest rate on $1 billion in debt due on June 1, 2023 and 11.5% on $2.32 billion in debt due on June 1, 2025. The notes will be secured in part by 28 of Royal Caribbean's cruise ships. 

The cruise-line operator intends to use the proceeds to repay its $2.35 billion senior secured term loan, as well as general corporate purposes.

A cruise ship sailing in the ocean with the sun shining behind it.

Royal Caribbean's $3.3 billion debt sale could keep it sailing well into the future. Image source: Getty Images.

Now what

Despite the high interest costs, investors appear to be breathing a sigh of relief that Royal Caribbean was able to raise more than $3 billion in fresh capital. With its ships docked due to the coronavirus-related sailing restrictions, Royal Caribbean is bleeding cash.

Investors are hoping that this debt offering will give the beleaguered company a chance to survive long enough to resume normal sailing operations and perhaps see the end to the COVID-19 crisis.