Originally Posted by
calypso
In this context pushing back the debt repayment to a period where all these one off costs are no longer a factor makes a lot of sense. Tackling the issues head on seems a more sensible strategy that trying to outrun them which appeared to be the previous plan. It sets the basis to rescue the business and return to profit.
If that would be the case Norwegian would simply issue new bonds to pay back the old ones. Only problem: NOBODY wants to buy Norwegian bonds, these bonds are now yielding over 30% in times when banks offer 0% and still there are no buyers..
Defaulting on a bond severely restricts the issuer’s ability to acquire financing in the future, a default is usually a last resort and therefore a sign of severe financial distress.