Moody’s hikes Royal Caribbean

Moody's Investors Service said it upgraded Royal Caribbean Cruises Ltd.’s ratings, including its corporate family rating to Ba2 from B1 and its probability of default rating to Ba2-PD from B1-PD. Moody's also raised Royal Caribbean's backed senior secured rating to Baa2 from Ba1, backed senior unsecured ratings to Ba1 from Ba3 and senior unsecured ratings to Ba2 from B1. The company's speculative grade liquidity rating was also changed to SGL-2 from SGL-3.

“The two-notch upgrade of Royal Caribbean's ratings reflects its strong performance driven by higher pricing, reduced cost inflation, capacity growth, and a return to pre-pandemic occupancy rates. This will enable the company to achieve debt/EBITDA and EBITA/interest expense of about 3.5x and 3x, respectively, at the end of 2024.

“Cash from operations will also improve to a level sufficient to cover all planned capital expenditures including new ship deliveries. Moody's expects that a portion of the company's free cash flow will be used to further reduce debt,” the agency said in a press release.

The outlook is positive.

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