Stocks ended a volatile week on a high note, despite more ugly data.

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(Bloomberg) — Royal Caribbean Cruises Ltd. was in a quandary.The company needed to raise money while its ships were docked amid the Covid-19 pandemic, and the bond market was open if Royal Caribbean was willing to mortgage ships as collateral. Similar deals had worked for rivals like Viking Cruises and Norwegian Cruise Line Holdings Ltd.Royal Caribbean had plenty of ships to offer. The problem? S&P Global Ratings had slashed its credit grade to junk, and the cruise company was expecting Moody’s Investors Service to follow. With those downgrades came steep restrictions on how much of its assets could be pledged to bondholders. The firm knew it needed more than the $1.66 billion of secured debt it would be permitted to raise to get through the crisis.Miami-based Royal Caribbean ultimately found a new structure that would let it sell more than $3 billion of debt linked to ships without running afoul of restrictions known as covenants embedded in its existing debt documents. It sold half of the debt as a traditional secured offering, and gave investors priority guarantees in the form of ship stock pledges for the rest.“We felt this was a creative way to access liquidity,” Chief Financial Officer Jason Liberty said in an interview with Bloomberg. “Investors knew we were securing with very strong assets, while we kept the flexibility to go back for more liquidity if we need to.” The company plans to regain its investment-grade ratings as soon as it can, he added.A representative for Morgan Stanley, which led the deal, declined to comment.Secured CatchThe Royal Caribbean offering highlights a challenge that an unprecedented number of so-called “fallen angels” may face as they seek funding as high-yield companies after losing investment-grade ratings. Some have especially strict covenants that can make selling secured debt difficult. A record 24 companies have lost high-grade status this year, according to S&P, and another 111 worldwide remain at risk of being junked.“Investor appetite for the Royal Caribbean deal might encourage similar deals like this going forward,” said Alexander Diaz-Matos, an analyst at credit research firm Covenant Review. “I think the lawyers are examining the documents now and seeing what they can do.”When Royal Caribbean began marketing its $3.32 billion offering last Wednesday, it said the deal was secured. But there was a catch laid out to investors as a footnote in deal documents: Only half of the bonds were actually backed by assets including 28 of the cruise liner’s ships worth around $12 billion, according to people with knowledge of the matter who asked not to be named discussing a private transaction. If an investor purchased $10 million of the offering, they would effectively receive $5 million of secured bonds and $5 million of unsecured debt.Read more: When United pawned old jets, bond traders sent a stark warningFew investors would be willing to take on unsecured bonds — which are further back in line for repayment in a bankruptcy or restructuring scenario — linked to an industry in crisis. Money managers have even turned up their noses at collateral they view as less than pristine. United Airlines Holdings Inc. yanked a bond offering earlier this month amid investor concern that the planes backing the debt were too old.Priority GuaranteesTo create more investor protections, Royal Caribbean gave buyers priority guarantees in the form of stock pledges tied to the units that owned each ship. That effectively put investors second in line, behind themselves, to access remaining ship collateral if the company fell into even harder times.If Royal Caribbean recoups its high-grade rating, all $3.32 billion of bonds will become secured in the traditional sense. But in the meantime, investors have what amounts to second-dibs on the ships, and the vessels aren’t pledged to any other piece of debt.The gambit paid off for Royal Caribbean: Investors put in enough orders for the bonds to let the firm trim the coupon it offered to pay on its three-year debt, and it’s using proceeds from the offering to repay a short-term loan and keep additional cash on hand.The new debt did come at a price. The three-year bond priced to yield 11.7%, and its five-year bond an even steeper 12.3%. But the firm would likely pay far more to sell unsecured bonds, if it could find buyers at all. One 5.25% unsecured bond the company sold in 2012 now yields more than 20%.If the coronavirus travel halt continues longer than expected, Royal Caribbean could try to tap the capital markets again for cash, according to the people. Under terms of its debt agreements, the company can raise as much as $3 billion between convertible debt and also bonds using a similar deal structure, one of the people said.Royal Caribbean is burning through $250 million to $275 million of cash per month but has sufficient liquidity to last at least 12 months, according to preliminary earnings released last week.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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The downside momentum into the close on Friday indicates that sellers are still in control so look for a new low for the year this week.

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(Bloomberg) — U.S. coronavirus cases rose 1.5% in the past 24 hours, the third straight daily decline. New York’s western region and the area around Albany are poised to reopen. The Trump administration stepped up attacks on China, accusing the nation — without evidence — of sending airline passengers to spread the virus. A Walt Disney mall in Florida will begin to open this week.The U.K. will be first in line to get an AstraZeneca vaccine. Tesla received permission to reopen its California factory after first defying local officials.Key Developments:Virus Tracker: Cases top 4.6 million; deaths exceed 314,000Pandemic shatters world order, sowing anger and mistrustCoronavirus wreaks havoc on future of U.S. immigrant laborEuropean leaders accept risk of reopening, hope for vaccineNew Zealand plans safe haven as Arden charts rapid rebuildEmirates weighs biggest cut yet as airline industry shrinksFed chief’s spend-more message steps onto Congress’s turfSubscribe to a daily update on the virus from Bloomberg’s Prognosis team here. Click VRUS on the terminal for news and data on the coronavirus. See this week’s top stories from QuickTake here.South Africa’s New Cases Accelerate (4:30 p.m. NY)South Africa reported a third straight day of higher infections, with 1,160 new cases — the most in one day. That brings the total to 15,515. Western Cape, home to the city of Cape Town, has almost 60% of cases nationwide and contributed 76% of new infections, according to the Health Ministry.Western Cape authorities previously attributed the rise in cases to a rigorous approach to testing, even as the province is facing clusters of infections in households, work places and supermarkets.About 21,300 tests were conducted in the past 24 hours. Deaths climbed to 264.U.S. Cases Rise 1.5%, Below Week’s Average (4 p.m. NY)U.S. cases increased 1.5% from the same time Saturday to 1.48 million, according to data collected by Johns Hopkins University and Bloomberg News. The rate of increase has slowed for three straight days, after peaking at 2% on Friday. The rise was below the average daily increase of 1.6% over the past week.Deaths rose 1.1% to 89,207.New York reported 1,889 new cases, bringing the total to 350,121, new deaths were 139 — a seven-week low — as the state total rose to 22,619.New Jersey had 1,272 new cases, raising the total to 146,334, with 107 new deaths, pushing the toll to 10,356, Governor Phil Murphy said. State hospitals reported 3,411 patients Saturday night, the fewest since April 14.California reported 2,046 new cases, with a total of 78,839, and added 57 deaths, bringing the total to 3,261.Pennsylvania registered 623 new cases, the fewest since May 11, for a total of 62,234, and 15 new deaths for a total of 4,418, the state health department said.Disney Begins Florida Reopening (3:45 p.m. NY)Walt Disney Co. will begin reopening in Florida, starting Wednesday with some shops and restaurants resuming operations in the Disney Springs mall near Orlando, the company said on its website.Disney-owned shops and restaurants will open a week later, on May 27. All visitors will be required to have their temperature taken and wear face coverings.Walt Disney World and the Disney Resort hotels remain closed, with no reopen date set. Florida Governor Ron DeSantis last week asked theme parks to submit plans on how to safely reopen.Cuomo Takes Nasal Test on Camera (3 p.m. NY)Governor Andrew Cuomo engaged in a bit of political theater during his daily briefing as he had a swab inserted in his nostril to demonstrate the ease of getting checked for the virus.“I’m not in pain, I’m not in discomfort,” he said in Albany after Dr. Elizabeth Dufort used a long stick to collect the sample. “There is no reason why you should not get the test.”Cuomo said the state is performing 40,000 tests a day and has the capacity to do more to make sure it avoids a new spike in cases. He also expanded who is qualified for testing: those in sectors returning to work first, in construction, manufacturing and curbside retail.French Deaths Rise Most in 3 Weeks (2 p.m. NY)France reported the largest daily increase in deaths since April 23, while hospitalizations and the number of patients in intensive care continued to decline. Cases increased less than the recent average.Deaths rose by 483 to 28,108, France’s health ministry said, without giving a reason for the surge. Authorities reported a 490 new cases, bringing the total to 216,030. Hospitalizations declined by 71 to 19,361 and patients in intensive care fell by 45 to 2,087.NYC Warns on Possible Layoffs (1:50 p.m. NY)New York City Mayor Bill de Blasio hinted at first-responder layoffs as tax revenue plunges during the lockdown. A month ago de Blasio warned that $2 billion in city services could be slashed in the next year, from garbage pickups to Staten Island Ferry trips.“When I told you about that $7.5 billion, that’s revenue that’s gone that pays for cops, firefighters, teachers, sanitation workers,” de Blasio said on Fox News Channel’s “Sunday Morning Futures.” “I’m probably going to see more and more revenue gone because our economy won’t come back without a stimulus.”U.K. First to Get AstraZeneca Vaccine (1 p.m. NY)AstraZeneca Plc will make as many as 30 million doses of vaccine available to the U.K. by September and deliver 100 million this year. The U.K. will get first access to the vaccine should it be successful.The vaccine, being developed at the University of Oxford, will get 65.5 million pounds ($79 million) of funding, U.K. Business Secretary Alok Sharma said. The inoculation is being studied in humans and could reach late-stage trials by mid-year. Another 18.5 million pounds will go to Imperial College London as trials accelerate.Earlier, the U.K. said a vaccine production facility will open in summer 2021, a year earlier than previously planned, after receiving 131 million pounds in government funding to accelerate work.Ireland Has Fewest Deaths in 2 Months (1 p.m. NY)Ireland reported its lowest number of new cases in two months, as the government prepares to start easing lockdown restrictions. There were 64 new cases, with 10 deaths, the health ministry said in an emailed statement. That’s the fewest cases since March 16.Some construction and businesses including hardware stores and garden centers can reopen from Monday.The nation has reported 1,543 deaths so far, with 24,112 cases overall. Dublin has 49% of the nation’s infections.Italy’s Deaths Lowest Since Early March (12:15 p.m. NY)Italy reported 145 new deaths, the lowest total since March 9, as the government prepares to further ease restrictions on movements and activities starting Monday. Total deaths rose to 31,908 while cases rose by 675 to 225,435 as of Sunday, according to the Italian Ministry of Health.N.Y. Has Fewest Deaths Since March 26 (12:05 p.m. NY)New York reported 139 new deaths related to the coronavirus, the lowest daily figure since March 26, Governor Andrew Cuomo said at a press briefing.Cuomo said Western New York, which includes Buffalo, and the Capital Region are qualified to reopen after sufficient contact tracers are trained. On Friday, five of 10 regions began to reopen after a shutdown order expired. New York City and Long Island don’t meet the benchmarks.New York Mayor Bill de Blasio said residents near the city’s beaches can only walk the beaches and boardwalks. “No swimming, no lifeguards, no congregating,” he said on the Fox Business Channel.Azar: Vaccine Plan is ‘Goal,’ Not ‘Pledge’ (11:50 a.m. NY)Health and Human Services Secretary Alex Azar said the Trump administration has a goal to make of 300 million vaccine doses by year end, and the target could be missed. “It’s not a pledge,” Azar said on CBS’s “Face the Nation.” “It’s a goal of what we’re going to mobilize the entire U.S. government, private sector to achieve.”Azar said drug manufacturers are “wringing the inefficiency” out of the traditional multi-phase process to speed development and get safe and effective vaccines.U.K. Reports Fewest Deaths Since March 24 (11:40 a.m. NY)The U.K. reported an additional 170 deaths from the coronavirus, the smallest increase since March 24. Total deaths rose to 34,636 with 243,303 confirmed cases.Newsom: Most of California Is Open (11:30 a.m. NY)Governor Gavin Newsom said about 75% of California’s economy is reopened as dozens of counties get restaurants, offices, manufacturing, logistics and warehouses back operating. People are observing physical distancing and wearing face coverings, Newsom said on CNN’s “State of the Union.” One missing element: stadiums with sports fans. “As much as we want to see that happen,” he said, “the health consequences could be profound and devastating and set back all the progress we have made.”Colorado Students May Stay Home (11:20 a.m. NY)Colorado Governor Jared Polis said 10% to 20% of parents may keep their children at home when schools shut by the pandemic reopen, which he said could have a side benefit. “It means there can be less crowding at the schools because of those individual choices that some parents make to continue with online until it’s even safer,” Polis said on “Fox News Sunday.”Administrators are building schedules that reduce student interactions, such as at lunchtime or between classes, Polis said.Trump Aide Blames China for Spread (10:23 a.m. NY)The Trump administration stepped up its campaign of blaming China for the coronavirus, with a top aide suggesting Beijing sent airline passengers to spread the infection worldwide.“The virus was spawned in Wuhan province, patient zero was in November,” White House trade adviser Peter Navarro said on ABC’s “This Week.” “The Chinese, behind the shield of the World Health Organization, for two months hid the virus from the world and then sent hundreds of thousands of Chinese on aircraft to Milan, New York and around the world to seed that.”Newsom Says Some California Schools Won’t Open in Fall (10:08 a.m. NY)Though many California schools will resume in the fall, some “will not be open,” Governor Gavin Newsom said in a CNN interview.“We are moving forward in hope and expectation that we can start that school year very strategically and methodically — again based upon the health as a prime frame of reference in terms of those decisions.”India Extends Lockdown to May 31 (9:33 a.m. NY)India extended its nationwide lockdown to the end of the month while easing some curbs.Sports complexes and stadiums will now be able to operate without spectators and interstate travel will be allowed with permits, the home ministry said in a statement on Sunday evening. Public transport, along with malls, cinemas, schools, gymnasiums and tourist spots will remain closed.Earlier, Maharashtra, the state that’s home to India’s financial capital, Mumbai, extended its lockdown until May 31 to contain the spreading outbreak, Chief Minister Uddhav Thackeray announced on Twitter. As of Sunday morning, the state reported 30,706 Covid-19 cases, or a third of India’s total infections.Egypt Tightens Restrictions During Eid (8:47 a.m. NY)Shops, restaurants, beaches, parks and malls will be closed from May 24-29, Egyptian Prime Minister Mostafa Madbouly said in a televised press conference.A curfew will go into effect at 5 p.m. May 24 and run for six days before being eased to 8 p.m. to 6 a.m. starting May 30. Gradual easing of restrictions will start June 15.Portugal to Open Restaurants, Some Schools (8:45 a.m. NY)The second stage of Portugal’s plan to ease confinement measures starts on Monday, when restaurants will be allowed to reopen with capacity limited to 50%. Schools will open only for students in the final two years of secondary education.“We’re going to enter a period of recovery of confidence,” Secretary of State for Health Antonio Lacerda Sales said at a press conference in Lisbon on Sunday. “Fear should not paralyze us, it should make us more vigilant.”Portugal reported 226 new coronavirus cases on Sunday, compared with 227 on Saturday, taking the total to 29,036, the government said. The total number of deaths rose by 15 to 1,218. The number of hospitalized cases and those in intensive care units both fell.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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