Moody’s cuts Royal Caribbean

Moody’s Investors Service said it downgraded the ratings of Royal Caribbean Cruises Ltd. including its senior unsecured rating to Baa3 from Baa2. Royal Caribbean’s ratings remain on review for downgrade. The senior secured Baa2 rating of Silversea Cruise Finance Ltd. has been placed on review for downgrade.

“The downgrade to Baa3 reflects the unprecedented impact the global spread of the coronavirus (Covid-19) is having on the cruise industry, including the suspension of all sailing operations for Royal Caribbean’s brands through May 11,” stated Pete Trombetta, Moody’s a lodging and cruise analyst, in a press release.

. “Our base case assumption is that the cruise operations in the U.S. are suspended through June 30, resulting in highly negative free cash flow and that there will be a slow recovery when sailings resume. While we expect that earnings will improve in 2021, we anticipate that bookings will be weak relative to 2019, which will result in Royal Caribbean’s debt/EBITDA approximating 4.5x as of year-end 2021,” added Trombetta.

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