Royal Caribbean Cruises (RCL) shares tumbled 5.20% in pre-market trading on Thursday, as the cruise industry faced a sector-wide sell-off triggered by Norwegian Cruise Line Holdings' (NCLH) debt refinancing announcement.

The sharp decline in Royal Caribbean's stock appears to be collateral damage from Norwegian's financial maneuvers. NCLH revealed plans to swap approximately $285.4 million of its 5.375% exchangeable notes due 2025 for newly issued 0.875% exchangeable notes due 2030, along with a cash payment of about $51.6 million. To facilitate this cash payment, Norwegian is issuing about 2.7 million new shares in a registered direct equity offering.

This refinancing move by Norwegian Cruise Line has sent ripples through the entire cruise sector, with investors expressing concerns about the financial health and debt management strategies of cruise operators in general. In pre-market trading, shares of Norwegian were down 1.7%, while both Royal Caribbean and Carnival Corporation saw declines of about 2%. The market's reaction suggests a broader apprehension about the cruise industry's financial stability, leading to a sector-wide sell-off that has hit Royal Caribbean particularly hard.