Cruise line convertibles surge on positive day for market; Twitter deal back in play

Chicago, Oct. 4 – Vacation cruise line names were surging on Tuesday, substantially beating the 3%-plus increases of the S&P 500 index, the Nasdaq Composite index and the Russell 2000 index.

The bonds of three of the major cruise lines were following their share prices higher.

Royal Caribbean Cruises Ltd. had the best of all possible days with the company’s stock skyrocketing, up 16.78% at the close to land at $43.85.

The company’s 6% convertible bonds rose steadily throughout the day, starting the morning at 106.83 and then subsequently ticking up to 115 to come in just before the close at the high end of 114.

The rescission of the mask mandate on big cruise names, on Monday, was a hit with investors.

Norwegian Cruise Line Holdings Ltd. also zoomed up on Tuesday.

The 1.125% convertible bonds due 2027 were nearly back to the starting line from where they were last Thursday before the industry was dismayed by Carnival Corp.’s earnings announcement.

Like Royal Caribbean, the bonds were moving up steadily during the day and coming off the highest trading point just before the close. The company’s bonds recovered more than 4 points to close at 67.68, just below the 68.5 last Thursday evening.

The 5.375% bonds due 2025, also from NCL, did not make the return to Thursday, either, but were markedly higher over the day on Tuesday.

The bonds were stronger by 4 points to approximately 105 on modest action after a busier Monday had them 2 points better. The bonds fell 7.5 points on Friday.

Carnival, which caused the seasickness on Friday, saw its stock leap up 13.28% on Tuesday.

These are all recoveries; Carnival is still lower by 15.65% in five-day trading action.

Carnival’s 5.75% bonds due 2024 used Tuesday to move up just shy of 4 points, sighted at 103.695 late in the day.

This puts the bonds higher than where they were on Friday, but they have dropped over the last several weeks from where they stood on Sept. 15 at 135.5.

Twitter twist

There was a twist in the plot line of the “will-they/won’t they” story of the year, when Elon Musk magnanimously suggested he might buy Twitter Inc. at the price he had committed to in the spring – $54.20 per share, the New York Times reported.

And, while bondholders have been shrugging off the drama since the deal went on the rocks, some bond investors traded like they believed the deal would actually go forward.

Bondholders of Twitter’s 0.25% convertibles due 2024 pushed trading prices up about 10 points after the news broke. The bonds were at 109.4 at the close, a level not witnessed since May.

It was business as usual earlier in the day with the bonds trading just above par until the news came out.

Twitter’s stock was driven up 22.24%, all of that increase after noon ET. The company’s shares ended the day at $52.

Ford bonds active

Ford Motor Co.’s zero-coupon bonds due 2026 were also active on the tape on Tuesday.

Ford released a press release that business is booming on its electric vehicles and sales tripled in September for the auto class.

Shareholders and bondholders alike viewed the news favorably and charts jumped higher.

The press release came out early in the day and the bonds drove 5 points better, actively changing hands throughout the day in a range of 95 to 97 with late trades hovering around that 97 point.

Ford’s bonds have been spiraling lower since mid-September, staging a mini-recovery only to fall back again last week.

Ford’s stock closed up 7.76%, at $12.36.

Mentioned in this article:

Royal Caribbean Cruises Ltd. NYSE: RCL

Norwegian Cruise Line Holdings Ltd. NYSE: NCLH

Carnival Corp. NYSE: CCL

Twitter Inc. NYSE: TWTR

Ford Motor Co. NYSE: F

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