What: Global Ship Lease (NYSE:GSL) is a company that owns a fleet of high quality containerships that are leased out under fixed-rate time charters. The stock price shot up nearly 12% yesterday, and surged another 6% today before settling down with a 2% gain.

The surge came after yesterday's announcement that Global Ship Lease plans to issue an aggregate principal amount of up to $400 million of first priority secured notes due 2021.

So what: The company will use the net proceeds from the offering, along with cash on hand, to repay all outstanding borrowings under its existing credit facility, and will terminate the company's existing interest rate swap agreements, according to the company's press release.

Now what: Most times when companies issue more debt, it isn't in investors' best interests, and the stock price tends to sink lower. However, the company's move to repay outstanding borrowings and terminate its existing interest rate swap agreements, should benefit Global Ship Lease in the long run. In addition, with shipping companies, there's sometimes a need for extra liquidity and capital, which could be one reason investors apparently cheered the decision.

If the company ends up using up to the full $400 million, its debt level will be something investors must keep an eye on going forward. Consider the fact that, since the fourth quarter of 2009, Global Ship Lease has paid down debt to a total of $214.8 million – just over half of what it will issue now.

During its third quarter, Ian Webber, Chief Executive Officer of Global Ship Lease, stated: "With a full time chartered fleet and nearly $1 billion in contracted revenues and a de-levered balance sheet, we remain in a strong position to generate stable cash flow for shareholders and further strengthen our balance sheet."

While it's nice to hear the cash flows will be stable enough to continue paying down debt, I'll stay on the sidelines, and keep this stock on my watch list for now.

Fool contributor Daniel Miller has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.