As the entertainment industry comes under enormous pressure from the global coronavirus pandemic, Carnival Corp. has seen shares jump 33% in past two trading days on Monday as Saudi Arabia took an 8% stake in the cruise line and the company closed its public offering of tens of millions of shares ordinary.
The company also announced billions of bonds.
“I think it’s amazing that there is still an appetite for risky debt here, and it could make a huge difference to a final economic return,” said host of “Mad Money” about the transactions. “, Assuming the markets no longer freeze. . “
Cramer pointed to a big contrast in the underlying causes of the current economic slowdown, which he called a “coronavirus recession” and the latest recession.
The economic slowdown in the late 2000s, the worst since the Great Depression of the 1930s, was triggered by a financial breakdown. This is not the case this time.
“This time, companies that really need the money can get it. This time there is no financial crisis, at least not yet, “said Cramer. “If you remember, on a bad day a dozen years ago, there was very little money to be had, especially for the banks. “
Comments come the same day that the stock of a hampered cruise liner rose nearly 11% after the company managed to attract interest from the Saudi sovereign wealth fund.
The Saudi sovereign wealth fund said it had purchased 43.5 million shares from the American cruise line. In addition, Carnival sold 71.88 million shares for $ 8.
The carnival had lost 85% of its market value from its close of $ 51.90 in mid-January to its lowest close of $ 7.97 last Thursday. The company, along with the rest of the business community, is struggling to respond to the economic impact of the unexpected closings that have been ordered to slow the spread of the deadly virus. In addition, consumer demand for cruises has evaporated after passengers fell ill on ships at the start of the epidemic, which began in China.
Carnival also said it has sold nearly $ 2 billion of senior notes with a 5.75% coupon and expects to close on $ 4 billion of senior notes with a coupon of 11.5%. , both due in 2023. In the event that a company goes bankrupt, the senior notes or bonds have priority for repayment.
“It’s a big hit because they can’t do business,” said Cramer. “Even genuinely struggling companies can raise capital here, a good sign for the economy, at least for now.”