Debt

6 Months Ended

Jun. 30, 2022

Note 7. Debt

Debt consists of the following (in thousands):


	Interest Rate (1)	Maturities Through	As of June 30, 2022		As of December 31, 2021
Fixed rate debt:
Unsecured senior notes	3.70% to 9.13%	2022 - 2028	$	6,595,735	$	5,604,498
Secured senior notes	10.88% to 11.50%	2023 - 2025	2,361,570		2,354,037
Unsecured term loans	1.28% to 5.89%	2026 - 2034	4,767,955		2,860,567
Convertible notes	2.88% to 4.25%	2023	1,725,000		1,558,780
Total fixed rate debt			15,450,260		12,377,882
Variable rate debt:
Unsecured revolving credit facilities (2)	3.09% to 3.49%	2022 - 2024	2,611,342		2,899,342
USD unsecured term loan	3.34% to 6.79%	2022 - 2033	4,569,466		5,018,740
Euro unsecured term loan	2.26% to 4.72%	2023 - 2036	577,098		685,633
Total variable rate debt			7,757,906		8,603,715
Finance lease liabilities			422,893		472,275
Total debt (3)			23,631,059		21,453,872
Less: unamortized debt issuance costs			(417,852)		(363,532)
Total debt, net of unamortized debt issuance costs			23,213,207		21,090,340
Less—current portion			(5,466,486)		(2,243,131)
Long-term portion			$	17,746,721	$	18,847,209

(1) Interest rates based on outstanding loan balance as of June 30, 2022 and, for variable rate debt, include either LIBOR or EURIBOR plus the applicable margin.

(2) Includes $1.9 billion facility and $1.3 billion facility, the vast majority of which is due in 2024. Our $1.9 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.30% which interest was 3.09% as of June 30, 2022 and is subject to a facility fee of a maximum of 0.20%. Our $1.3 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.70%, which interest was 3.49% as of June 30, 2022 and is subject to a facility fee of a maximum of 0.30%.

(3) At June 30, 2022 and December 31, 2021, the weighted average interest rate for total debt was 6.09% and 5.47%, respectively.

In January 2022, we took delivery of Wonder of the Seas. To finance the delivery, we borrowed a total of $1.3 billion under a credit agreement novated to us upon delivery of the ship in January 2022, resulting in an unsecured term loan which is 100% guaranteed by Bpifrance Assurance Export ("BpiFAE"), the official export credit agency ("ECA") of France. The unsecured loan amortizes semi-annually over 12 years and bears interest at a fixed rate of 3.18% per annum.

In January 2022, we issued $1.0 billion of senior notes (the "January 2022 Unsecured Notes") due in 2027 for net proceeds of approximately $990.0 million. Interest accrues on the January 2022 Unsecured Notes at a fixed rate of 5.375% per annum and is payable semi-annually in arrears. The proceeds from the January 2022 Unsecured Notes are being used to repay principal payments on debt maturing in 2022 (including to pay fees and expenses in connection with such repayments) and have been temporarily applied to repay borrowings under our revolving credit facilities.

In February 2022, we entered into certain agreements with MS where MS agreed to provide backstop committed financing to refinance, repurchase and/or repay in whole or in part our existing and outstanding 10.875% Senior Secured Notes due 2023, Priority Guaranteed Notes and 4.25% Convertible Notes due 2023. Pursuant to the agreements, we may, at our sole option, issue and sell to MS (subject to the satisfaction of certain conditions) five-year senior unsecured notes with gross proceeds of up to $3.15 billion at any time between April 1, 2023 and June 29, 2023, to refinance the aforementioned notes.

In April 2022, we took delivery of Celebrity Beyond. To finance the delivery, we borrowed a total of €0.7 billion under a credit agreement novated to us upon delivery of the ship in April 2022, resulting in an unsecured term loan which is 100%

guaranteed by BpiFAE. The unsecured loan amortizes semi-annually over 12 years and bears interest at a fixed rate of 1.28% per annum.

In July 2022, we purchased a ship for our Silversea Cruises brand. To finance the purchase, we borrowed $277 million, which is 95% guaranteed by Euler Hermes Aktiengesellschaft (“Hermes”), the official export credit agency of Germany. The loan amortizes semi-annually over 15 years and bears interest at a floating rate equal to SOFR plus a margin of 1.25%. Principal payments to the lender will commence in July 2024 and the loan will mature in July 2037.

Our export credit facilities and our non-export credit facilities have an outstanding principal amount of approximately $13.1 billion as of June 30, 2022. These facilities contain covenants that require us, among other things, to maintain a fixed charge coverage ratio of at least 1.25x and limit our net debt-to-capital ratio, and under certain facilities, to maintain a minimum shareholders' equity. In 2021, we amended our non-export credit facilities and export credit facilities, and certain credit card processing agreements, to extend the waiver of our financial covenants through and including at least the third quarter of 2022, and subsequently in the third quarter of 2021, we entered into a letter agreement to extend the waiver period for our export credit facilities to the end of the fourth quarter of 2022. Further, in July 2022, we amended our non-export-credit facilities and export credit facilities, and certain credit card processing agreements. Among other things, the amendments modified the levels at which our net debt to capitalization covenant will be tested during the period commencing immediately following the end of the waiver period and continuing through the end of 2025 and the amount of minimum shareholders' equity required to be maintained through 2025. The amendments impose a monthly-tested minimum liquidity covenant of $350.0 million, which in the case of the non-export credit facilities terminates at the end of the waiver period and in the case of the export credit facilities terminates either in July 2025, or when we pay off all deferred amounts, whichever is earlier. In addition, the amendments to the non-export credit facilities place restrictions on paying cash dividends and effectuating share repurchases through the end of the third quarter of 2022, while the export credit facility amendments require us to prepay any deferred amounts if we elect to issue dividends or complete share repurchases.

As of June 30, 2022, our aggregate revolving borrowing capacity was $3.2 billion and was mostly utilized through a combination of amounts drawn and letters of credits issued under the facilities. Certain of our surety agreements with third party providers for the benefit of certain agencies and associations that provide travel related bonds, allow the sureties to request collateral. We also have agreements with our credit card processors relating to customer deposits received by us for future voyages. These agreements allow the credit card processors to require us, under certain circumstances, to maintain a reserve that can be satisfied by posting collateral. As of June 30, 2022, we have posted letters of credit as collateral with our sureties and credit card processors under our revolving credit facilities in the amount of $111.9 million.

Executed amendments are in place for the majority of our credit card processors, waiving reserve requirements tied to the breach of our financial covenants through at least September 30, 2022, with modified covenants thereafter, and as such, we do not anticipate any incremental collateral requirements for the processors covered by these waivers in the next 12 months. We have a reserve with a processor where the agreement was amended in the first quarter of 2021, such that proceeds are withheld in reserve, until the sailing takes place or the funds are refunded to the customer. The maximum projected exposure with the processor, including amounts currently withheld and reported in Trade and other receivables, is approximately $309.6 million. The amount and timing are dependent on future factors that are uncertain, such as the value of future deposits and whether we transfer our business to other processors. If we require additional waivers on the credit card processing agreements and are not able to obtain them, this could lead to the termination of these agreements or the trigger of reserve requirements.

Except for the term loans we incurred to acquire Celebrity Flora and Silver Moon, all of our unsecured ship financing term loans are guaranteed by the export credit agency in the respective country in which the ship is constructed. For the majority of the loans as of June 30, 2022, we pay to the applicable export credit agency, depending on the financing agreement, an upfront fee of 2.35% to 5.48% of the maximum loan amount in consideration for these guarantees. We amortize the fees that are paid upfront over the life of the loan. We classify these fees within Amortization of debt issuance costs in our consolidated statements of cash flows. Prior to the loan being drawn, we present these fees within Other assets in our consolidated balance sheets. Once the loan is drawn, such fees are classified as a discount to the related loan, or contra-liability account, within Current portion of long-term debt or long-term debt.

The following is a schedule of annual maturities on our total debt, net of debt issuance costs of $417.9 million, and including finance leases, as of June 30, 2022 for each of the next five years (in thousands):


Year			As of June 30, 2022 (1)
Remainder of 2022			1,579,926
2023			5,746,141
2024			3,869,007
2025			2,482,849
2026			2,693,083
Thereafter			6,842,201
			23,213,207

(1) Debt denominated in other currencies is calculated based on the applicable exchange rate at June 30, 2022.