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CFDs are complex instruments. 72% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

Carnival Corp share price set to trade lower after borrowing billions amid Covid-19

Carnival is likely to see its stock trade lower after paying a whopping 7.5% interest on top of interbank rates to borrow $2.8 billion to strengthen its balance sheet due to the economic impact of the coronavirus pandemic.

Carnival Corpoation Source: Bloomberg

Carnival Corporation is likely to see its stock trade lower after it was forced to pay a whopping 7.5% interest on top of interbank rates to borrow $2.8 billion to strengthen its balance sheet due to the economic impact of the coronavirus pandemic.

The senior secured term loans are comprised of two tranches issued against 96% of the face value of its shipping fleet, with the hefty interest rate a reflection of its recent credit rating downgrade to junk status by Standard & Poor’s earlier this month.

‘Carnival Corporation intends to use the net proceeds from the term loan facility for general corporate purposes, which includes the repayment of near-term debt maturities,’ the company said in a statement.

The beleaguered British-American cruise operator has been forced to shutdown amid the Covid-19 outbreak, with investors concerned that the industry may never set sail again so long as the coronavirus pandemic persists.

Carnival has already cancelled voyages on its lines, including P&O Cruises and Princess, through the peak summer season with the US and other countries banning ships from mooring.

Carnival Corporation posts $4.4 billion quarterly loss

Due to the challenging market conditions brought about by the coronavirus pandemic, Carnival’s share price is down 67% year-to-date, with the stock likely to fall further the longer its ships remain at a standstill.

In its second quarter (Q2), the cruise operator reported a $4.4 billion loss, down from a profit of $451 million in the same period last year, with the company warning investors of further losses to come.

‘The company is currently unable to provide an earnings forecast,’ Carnival Corporation said in a statement. ‘The pause in guest operations is continuing to have material negative impacts on all aspects of the company's business.’

‘The longer the pause continues, the greater the impact on the company's liquidity and financial expectations,’ the company added.

Carnival Corporation closed 6% higher on Monday at $16.78, with the stock falling below the $8 per share mark in April – a level the stock could return to if the Covid-19 pandemic persists.

Carnival Corporation extends pause of operations to September

Earlier this month, the cruise operator said that it will extend its operational pause of its cruises in North America until the end of September as a result of the coronavirus pandemic.

‘We have watched with great interest as commerce, travel and personal activities have begun to start back up, and once we do resume service, we will take all necessary steps to ensure the health and safety of our guests, crew and the communities we bring our ships to in order to maintain public confidence in our business,’ Carnival Cruise Line President Christine Duffy said in a letter to customers.

‘Nevertheless, we apologise for disrupting your vacation plans and appreciate your patience as we work through these decisions.’

How to trade stocks with IG

Looking to trade Carnival Corporation and other stocks? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs in a few easy steps:

  1. Create an IG trading account or log in to your existing account
  2. Enter ‘Carnival PLC’ in the search bar and select it
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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