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Debt | 12 Months Ended
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Dec. 31, 2023
Debt Disclosure [Abstract] |
Debt | Note 8. Debt Debt consists of the following (in millions):
|  |  |  |  |  | As of December 31,
|  | Interest Rate(1) |  | Maturities Through |  | 2023 |  | 2022
Fixed rate debt: |  |  |  |  |  |  |  |
Unsecured senior notes |  | 3.70% - 11.63% |  | 2026 - 2030 |  | $ | 7,899 |  |  | $ | 7,199 |
Secured senior notes |  | 8.25% |  | 2029 |  | 1,000 |  |  | 2,371 |
Unsecured term loans |  | 1.28% - 5.89% |  | 2027 - 2035 |  | 6,569 |  |  | 4,561 |
Convertible notes |  | 6.00% |  | 2025 |  | 1,150 |  |  | 1,725 |
Total fixed rate debt |  |  |  |  |  | 16,618 |  |  | 15,856 |
Variable rate debt(2): |  |  |  |  |  |  |  |
Unsecured revolving credit facilities(3) |  | 7.25% -7.50% |  | 2025 - 2028 |  | 899 |  |  | 2,744 |
USD unsecured term loans |  | 5.99% - 9.98% |  | 2024 - 2037 |  | 3,666 |  |  | 4,336 |
Euro unsecured term loans |  | 5.26% -6.10% |  | 2024 - 2026 |  | 443 |  |  | 535 |
Total variable rate debt |  |  |  |  |  | 5,008 |  |  | 7,615 |
Finance lease liabilities |  |  |  |  |  | 369 |  |  | 351 |
Total debt (4) |  |  |  |  |  | 21,995 |  |  | 23,822 |
Less: unamortized debt issuance costs |  |  |  |  |  | (543) |  |  | (431) |
Total debt, net of unamortized debt issuance costs |  |  |  |  |  | 21,452 |  |  | 23,391 |
Less—current portion |  |  |  |  |  | (1,720) |  |  | (2,088) |
Long-term portion |  |  |  |  |  | $ | 19,732 |  |  | $ | 21,303 |
(1)Interest rates based on outstanding loan balance as of December 31, 2023, and for variable rate debt, includes either EURIBOR or Term SOFR plus the applicable margin. (2)During the year ended December 31, 2023, we completed our transition from LIBOR to Term SOFR rates for all of our variable rate facilities, with such transition having taken effect at the interest reset date for each such facility. (3)Advances under our unsecured revolving credit facilities accrue interest at Term SOFR plus a 0.10% credit adjustment spread plus an interest rate margin primarily at 1.80%. Based on applicable Term SOFR rates, as of December 31, 2023, the maximum interest rate under the unsecured credit facilities was 7.50%. We also pay a facility fee primarily at 0.20% of the total commitments under such facility. (4)At December 31, 2023 and 2022, the weighted average interest rate for total debt was 6.06% and 6.23%, respectively. Unsecured Revolving Credit Facilities In January 2023, we amended and extended the majority of our two unsecured revolving credit facilities. The amendment 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. In October 2023, we refinanced both unsecured revolving credit facilities as well as the $502 million unsecured term loan scheduled to fully mature in October 2024, bringing our aggregate revolving credit capacity to $3.5 billion. As of December 31, 2023, $1.7 billion of the commitments are scheduled to mature in October 2026, $1.7 billion of the commitments are scheduled to mature in October 2028, and the remaining $97 million of commitments are scheduled to mature in April 2025. As of December 31, 2023, we had undrawn capacity of $2.6 billion under our unsecured revolving credit facilities. Convertible Notes In June 2023, our remaining $350 million of the 4.25% Convertible Senior Notes matured. The notes were settled using a combination of $338 million in cash, and the issuance of approximately 374,000 shares of common stock. The issuance of equity increased additional paid in capital by an immaterial amount. In November 2023, our remaining $225 million of the 2.875% Convertible Senior Notes matured. The notes were settled using a combination of $225 million in cash and the issuance of approximately 147,000 shares of common stock. The issuance of equity increased additional paid in capital by an immaterial amount. 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"). 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, which resulted in an immaterial loss on extinguishment of debt. In June 2023, we took delivery of Silver Nova. To finance the delivery, we borrowed a total of $503 million under the committed financing agreement, resulting in an unsecured term loan which is 95% guaranteed by Euler Hermes. The unsecured loan amortizes semi-annually over 12 years and bears interest at a fixed rate of 4.21% per annum. During 2023, we repaid the remaining $1.4 billion of our 11.50% secured senior notes due June 2025, which resulted in a total loss on extinguishment of debt of $105 million that was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive income (loss) for the year ended December 31, 2023. In October 2023, in connection with the revolving credit facilities refinancing described above, we paid the remaining $502 million of the $0.6 billion unsecured term loan due October 2023 which was previously amended in September 2022 to extend the maturity date of advances under the facilities held by consenting lenders by 12 months to October 2024. The payment resulted in an immaterial loss on extinguishment of debt recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive income (loss) for the year ended December 31, 2023. In November 2023, we took delivery of Celebrity Ascent. To finance the delivery, we borrowed a total of $844 million under the committed financing agreement, resulting in an unsecured term loan which is 100% guaranteed by Bpifrance Assurance Export. The unsecured loan amortizes semi-annually over 12 years. The majority of the loan bears interest at a fixed rate of 3.18% per annum and a portion of the loan bears interest at a floating rate equal to Term SOFR plus a margin of 1.45%. Based on applicable Term SOFR rates, as of December 31, 2023, the unsecured term loan weighted average interest rate was 3.33%. In November 2023, we took delivery of Icon of the Seas. To finance the delivery, we borrowed a total of $1.8 billion under the committed financing agreement, resulting in an unsecured term loan which is primarily guaranteed 100% by Finnvera plc and the remaining smaller portion guaranteed 95% by Euler Hermes. The unsecured loan amortizes semi-annually over 12 years. The majority of the loan bears interest at a fixed rate of 3.56% per annum and a portion of the loan bears interest at a floating rate equal to Term SOFR plus a margin of 1.53% - 1.58%. Based on applicable Term SOFR rates, as of December 31, 2023, the unsecured term loan weighted average interest rate was 4.76%. 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 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 $0.8 billion and $0.7 billion based on the exchange rate at December 31, 2023 and 2022, respectively, 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 Term 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. 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 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 (which were settled in November 2023 as described above) 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% that 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 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 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. 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, 2023, 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, discounts and premiums 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 revolving credit facilities, the majority of our term loans, and 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. As of December 31, 2023, our credit facility amendments require us to prepay outstanding deferred amounts of $910 million, if we elect to pay dividends or complete share repurchases. As of December 31, 2023, 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 6.00% convertible notes was as follows:
(in millions) | As of December 31, 2023 |  | As of December 31, 2022 |
Principal | $ | 1,150 |  |  | $ | 1,725 |  |
Less: Unamortized debt issuance costs | 13 |  |  | 24 |  |
| $ | 1,137 |  |  | $ | 1,701 |  |
The interest expense recognized related to the 6.00% convertible notes was as follows:
(in millions) | As of December 31, 2023 |  | As of December 31, 2022 |
Contractual interest expense | $ | 69 |  |  | $ | 76 |  |
Amortization of debt issuance costs | 8 |  |  | 16 |  |
| $ | 77 |  |  | $ | 92 |  |
Following is a schedule of annual maturities on our total debt including finance leases, as of December 31, 2023 for each of the next five years (in millions):
Year | As of December 31, 2023 (1)
2024 | $ | 1,722 |
2025 | 2,650 |
2026 | 3,406 |
2027 | 3,763 |
2028 | 3,489 |
Thereafter | 6,965 |
| $ | 21,995 |
(1) Debt denominated in other currencies is calculated based on the applicable exchange rate at December 31, 2023.

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