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Galveston advances $50m bond issue for Carnival terminal

Carnival Jubilee, under construction at Meyer Werft, is due to begin sailing from the Port of Galveston in late December
The Port of Galveston's board approved a plan to issue $50m in 20-year bonds for upgrades to Cruise Terminal 25, future home of Carnival Jubilee.

According to the Galveston Daily News, the Wharves Board of Trustees greenlighted the bonds despite some concern among members about the increased costs of the terminal project, which reportedly had ballooned from $25m originally.

Carnival Jubilee is scheduled to begin year-round service from Galveston in late December.

$53m upgrade

In May, Port Director/CEO Rodger Rees outlined a $53m expansion for the LNG-powered, 180,000gt ship including gangway modifications, a ramp, two elevators, an escalator and a new roof. He said the port also will make mandated facility improvements for US Customs and Border Protection.

Rees said the upgrades would be funded by cash reserves, a proposed bond issue and a usage agreement with Carnival.

Early repayment projected

The Galveston Daily News this week put the cost at $55m and cited Rees as saying Carnival will repay more than 80% of the debt, with current passenger projections indicating the money will be paid back early, in 11 years.

A cruise industry infrastructure expert not associated with the deal told Seatrade Cruise News the decision to issue bonds is a positive development.

Historically, Galveston funded cruise terminal upgrades from cash reserves.

'The Galveston board doesn't necessarily have a huge amount of cash on hand,' the source said. This is why they leased the land to Royal Caribbean to build its own terminal together with Ceres. That facility cost $125m.

Financing based on Carnival's credit

Now, with Carnival, the port is going to build up their infrastructure with the cruise line guaranteeing most of the cost, the source said. 'It is an efficient way for the port to grow. They're getting financing based on the cruise line's credit.' 

He added: 'That's one more bit of information to suggest there's a surge in the cruise industry post-pandemic.'

Port officials were to meet with city leaders to present the financing plan, according to the Galveston Daily News, and a city council vote is expected in August.