What happened

On a modestly green day for the stock market, with the S&P 500 just dipping its toe into positive territory as of 10 a.m. ET, shares of cruise stock company Carnival Corporation (CCL 1.13%) (CUK 0.88%) are doing better than most, up 2.8%.

Carnival announced last night that it has closed a previously announced debt exchange, and this appears to be what investors are cheering.  

So what

It's hardly groundbreaking news, but it is good news. For "no upfront cost," Carnival has successfully exchanged $339 million worth of convertible senior notes due in early 2023, on which it was paying 5.75% interest, for $339 million in other convertible senior notes that pay the exact same interest rate.

The difference being: The new debt doesn't have to be paid off until October 2024, giving Carnival 18 months of extra breathing room on its debt.

Now what

But here's what isn't different about Carnival today: While Carnival's debt due date extension reduces the chance the company will at some point have to declare insolvency, Carnival's debt load remains frighteningly large -- because while the debt rollover didn't raise the company's debt, it didn't reduce it, either.

Total debt at Carnival stands at $36.4 billion, with only $7.2 billion in cash offsetting it. Last year, servicing this debt cost Carnival $1.6 billion, and while Carnival managed to avoid paying a higher interest rate on this week's debt rollover, interest rates are still going up -- and there's no guarantee that the next time Carnival tries to roll over old debt, lenders won't demand a higher interest rate.    

The good news is that, pre-tax and pre-interest, Wall Street analysts still expect Carnival to earn $2.6 billion next year ($1 billion more than its current interest costs), so there's still a chance Carnival will earn a profit in 2023 -- if the Fed doesn't hike interest rates too much. In that regard, you're going to want to tune back in on Sept. 13, when the Bureau of Labor Statistics releases its next readout on how high inflation has gotten -- and, subsequently, when the Federal Reserve decides how much it will hike interest rates to address it.