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Debt | 12 Months Ended
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Dec. 31, 2022
Debt Disclosure [Abstract] |
Debt | Note 8. Debt Debt consists of the following (in thousands):
|  |  |  |  |  | As of December 31,
|  | Interest Rate(1) |  | Maturities Through |  | 2022 |  | 2021
Fixed rate debt: |  |  |  |  |  |  |  |
Unsecured senior notes |  | 3.70% - 11.63% |  | 2026 - 2029 |  | $ | 7,199,331 |  |  | $ | 5,604,498 |
Secured senior notes |  | 8.25% - 11.50% |  | 2025 - 2029 |  | 2,370,855 |  |  | 2,354,037 |
Unsecured term loans |  | 1.28% - 5.89% |  | 2027 - 2034 |  | 4,561,129 |  |  | 2,860,567 |
Convertible notes |  | 2.88% - 6.00% |  | 2023 - 2025 |  | 1,725,000 |  |  | 1,558,780 |
Total fixed rate debt |  |  |  |  |  | 15,856,315 |  |  | 12,377,882 |
Variable rate debt: |  |  |  |  |  |  |  |
Unsecured revolving credit facilities(2) |  | 5.72% -6.12% |  | 2024 |  | 2,744,105 |  |  | 2,899,342 |
USD unsecured term loans |  | 5.54% - 9.27% |  | 2023 - 2037 |  | 4,335,973 |  |  | 5,018,740 |
Euro unsecured term loans |  | 6.29% -6.92% |  | 2023 - 2028 |  | 534,589 |  |  | 685,633 |
Total variable rate debt |  |  |  |  |  | 7,614,667 |  |  | 8,603,715 |
Finance lease liabilities |  |  |  |  |  | 351,332 |  |  | 472,275 |
Total debt (3) |  |  |  |  |  | 23,822,314 |  |  | 21,453,872 |
Less: unamortized debt issuance costs |  |  |  |  |  | (431,123) |  |  | (363,532) |
Total debt, net of unamortized debt issuance costs |  |  |  |  |  | 23,391,191 |  |  | 21,090,340 |
Less—current portion |  |  |  |  |  | (2,087,711) |  |  | (2,243,131) |
Long-term portion |  |  |  |  |  | $ | 21,303,480 |  |  | $ | 18,847,209 |
(1)Interest rates based on outstanding loan balance as of December 31, 2022 and, for variable rate debt, includes either LIBOR, EURIBOR or Term SOFR plus the applicable margin. (2)Total capacity of $3.0 billion, with $0.3 billion of undrawn capacity as of December 31, 2022. Includes $1.9 billion facility and $1.1 billion facility, which are due April 2024 as of December 31, 2022. Our $1.9 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.30%, which interest rate was 5.72%, as of December 31, 2022 and is subject to a facility fee of a maximum of 0.20%. Our $1.1 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.70%, which interest was 6.12% as of December 31, 2022 and is subject to a facility fee of a maximum of 0.30%. (3)At December 31, 2022 and 2021, the weighted average interest rate for total debt was 6.23% and 5.47%, respectively. Unsecured revolving credit facilities As of December 31, 2022, we had aggregate borrowing capacity of $3.0 billion under our two unsecured revolving credit facilities due April 2024, which were mostly utilized through a combination of amounts drawn and letters of credit issued under the facilities. As of December 31, 2022, $0.3 billion remained undrawn under the facilities. In January 2023, we amended and extended the majority of our two unsecured revolving credit facilities. The amendment has extended the maturities of $2.3 billion of the $3.0 billion aggregate revolving capacity by one year to April 2025, with the remainder maturing in April 2024. 2023 Debt financing transactions In February 2023, we issued $700 million aggregate principal amount of 7.25% senior guaranteed notes due January 2030 ("7.25% Priority Guaranteed Notes" and together with the 9.25% Priority Guaranteed Notes, the "Priority Guaranteed Notes"). Upon closing, we terminated our commitment for the $700 million 364-day term loan facility. In addition, the remaining $350 million backstop committed financing was also terminated upon closing. 2022 Debt financing transactions 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 at a fixed rate of 5.375% per annum and is payable semi-annually in arrears. The proceeds from the January 2022 Unsecured Notes were used to repay principal payments on debt maturing in 2022 (including to pay fees and expenses in connection with such repayments). 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 April 2022, we took delivery of Celebrity Beyond. To finance the delivery, we borrowed a total of €0.7 billion or approximately $0.7 billion based on the exchange rate at December 31, 2022, 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 Silver Endeavour for our Silversea Cruises brand. To finance the purchase, we assumed $277 million of debt, which is 95% guaranteed by Euler Hermes Aktiengesellschaft (“Hermes”), the official export credit agency of Germany. The loan amortizes semi-annually over 13 years starting in July 2024 and bears interest at a floating rate equal to SOFR plus a margin of 1.25%. The loan will mature in July 2037. In August 2022, we issued $1.15 billion of convertible senior notes which accrue interest at 6.00% and mature in August 2025 (the "2025 Convertible Notes"). Upon conversion election, we may deliver shares of our common stock, cash, or a combination of common stock and cash, at our election. The initial conversion rate per $1,000 principal amount of the convertible notes is 19.9577 shares of our common stock, which is equivalent to an initial conversion price of approximately $50.11 per share, subject to adjustment in certain circumstances. Prior to May 15, 2025, the convertible notes will be convertible at the option of holders during certain periods, and only under certain circumstances set forth in the 2025 Convertible Notes Indenture. On or after May 15, 2025, the convertible notes will be convertible at any time until the close of business on the second scheduled trading day immediately preceding their maturity date. We received gross proceeds from the offering of $1.15 billion, which we used to repurchase $800 million aggregate principal amount of our 4.25% convertible senior notes due June 15, 2023 and $350 million aggregate principal amount of our 2.875% convertible senior notes due November 15, 2023 (the "Existing Convertible Notes") in privately negotiated transactions. The $1.15 billion repayment resulted in a total loss on the extinguishment of debt of $12.8 million, which was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive loss for the year ended December 31, 2022. In August 2022, we issued $1.25 billion of senior unsecured notes which accrue interest at 11.625% and mature in August 2027. The net proceeds of the offering of $1.23 billion were used to repay debt that matured in 2022, including the $650 million 5.25% unsecured senior notes due November 2022, which resulted in an immaterial loss on extinguishment of debt. In September 2022, we amended our $0.6 billion unsecured term loan due October 2023. The amendments, among other things, extend the maturity date of advances under the facilities held by consenting lenders by 12 months to October 2024. Consenting lenders received a prepayment equal to 10% of their respective outstanding advances. Following this amendment, the aggregate outstanding principal balance of advances under the unsecured term loan is $501.6 million, with $30.0 million maturing in October 2023 and $471.6 million maturing in October 2024. In October 2022, we issued $1.0 billion aggregate principal amount of 9.250% senior guaranteed notes due 2029 (the "9.25% Priority Guaranteed Notes") and $1.0 billion aggregate principal amount of 8.250% senior secured notes due 2029 (the "8.25% Secured Notes" and together with the 11.5% Secured Notes, the "Secured Notes"), both callable in April 2025. We used the combined net proceeds, of the respective offerings, together with cash on hand, to fund the redemption, including call premiums, fees and expenses, of our outstanding 9.125% senior priority guaranteed notes due 2023 and 10.875% senior secured notes due 2023, which resulted in a total loss on extinguishment of debt of $77.4 million, which was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive loss for the year ended December 31, 2022. 2021 Debt financing transactions In March 2021, we took delivery of Odyssey of the Seas. To finance the purchase, we borrowed $994.1 million under a previously committed unsecured term loan which is 95% guaranteed by Euler Hermes Aktiengesellschaft (“Hermes”), the official export credit agency of Germany. The loan amortizes semi-annually over 12 years and bears interest at a floating rate equal to LIBOR plus a margin of 0.96%. Prior to delivery during the first quarter of 2021, we amended the credit agreement to (i) increase the maximum loan amount under the facility to make available to us a maximum amount equal to the US dollar equivalent of 80% of the vessel purchase price plus 100% of the premium payable to Hermes and (ii) defer the payment of all principal payments due between April 2021 and April 2022, which amounts will be repayable semi-annually over a five year period starting in April 2022. In March 2021, we issued $1.50 billion of senior unsecured notes that mature in 2028, for net proceeds of $1.48 billion. Interest on the senior notes accrues at 5.5% per annum and is payable semi-annually. We used the proceeds from the notes to repay principal payments on debt maturing or required to be paid in 2021 and 2022, and the remaining for general corporate purposes. In June 2021, we issued $650.0 million of senior unsecured notes due in 2026 (the "June Unsecured Notes") for net proceeds of approximately $640.6 million. Interest accrues on the June Unsecured Notes at a fixed rate of 4.25% per annum and is payable semi-annually in arrears. We fully repaid the Silversea Cruises 7.25% senior secured notes due in 2025 (the "Silversea Notes"), in the amount of $619.8 million, with a portion of the proceeds from the June Unsecured Notes. We also funded call premiums, fees and expenses in connection with the redemption of the Silversea Notes with proceeds from the June Unsecured Notes. Additionally, during the second quarter of 2021, we repaid in full a $130 million term loan. In August 2021, we issued $1.0 billion of senior notes due in 2026 (the "August Unsecured Notes") for net proceeds of approximately $986.0 million. Interest accrues on the August Unsecured Notes at a fixed rate of 5.50% per annum and is payable semi-annually in arrears. We used the proceeds of the August Unsecured Notes to replenish our capital as a result of the redemption of a portion of the 11.50% senior secured notes due 2025 (the "11.5% Secured Notes"), in the amount of $928.0 million plus accrued interest and premiums. As of December 31, 2022, approximately $1.4 billion of the 11.5% Secured Notes remains outstanding. The repayment of the 11.5% Secured Notes resulted in a total loss on the extinguishment of debt of $141.9 million, which was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive loss for the year ended December 31, 2021. Export credit agency guarantees 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 December 31, 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. Debt covenants Our export credit facilities and our non-export credit facilities have an outstanding principal amount of approximately $12.1 billion as of December 31, 2022. These facilities, as well as certain of our credit card processing agreements, contain covenants that require us, among other things, to maintain a fixed charge coverage ratio, limit our net debt-to-capital ratio, maintain minimum liquidity, and under certain facilities, to maintain a minimum stockholders' equity. 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 (through the September 30, 2022 for non export and through December 31, 2022 for export facilities) and continuing through the end of 2025 and the amount of minimum stockholders' equity required to be maintained through 2025. The amendments continued to impose a monthly-tested minimum liquidity covenant of $350.0 million, which in the case of the non-export credit facilities terminated at the end of the waiver period (with the exception of the Revolver which was amended in January 2023 to include the minimum liquidity through April 2025) 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 continued to 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 pay dividends or complete share repurchases. As of December 31, 2022, we were in compliance with our debt covenants and we estimate we will be in compliance for the next twelve months. The net carrying value of the convertible notes was as follows:
(in thousands) | As of December 31, 2022 |  | As of December 31, 2021 |
Principal | $ | 1,725,000 |  |  | $ | 1,725,000 |  |
Less: Unamortized debt issuance costs | 24,110 |  |  | 188,764 |  |
| $ | 1,700,890 |  |  | $ | 1,536,236 |  |
The interest expense recognized related to the convertible notes was as follows:
(in thousands) | As of December 31, 2022 |  | As of December 31, 2021 |
Contractual interest expense | $ | 75,519 |  |  | $ | 65,406 |  |
Amortization of debt issuance costs | 16,145 |  |  | 118,566 |  |
| $ | 91,664 |  |  | $ | 183,972 |  |
Following is a schedule of annual maturities on our total debt including finance leases, as of December 31, 2022 for each of the next five years (in thousands):
Year | As of December 31, 2022 (1)
2023 | $ | 2,090,457 |
2024 (2) | 4,662,837 |
2025 | 3,663,440 |
2026 | 2,754,876 |
2027 | 3,493,703 |
Thereafter | 7,157,001 |
| $ | 23,822,314 |
(1) Debt denominated in other currencies is calculated based on the applicable exchange rate at December 31, 2022. (2) In January 2023, we amended and extended $2.3 billion of our two unsecured revolving credit facilities by one year from April 2024 to April 2025.

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