S&P rates Viking Cruises notes B-

S&P said it assigned a B- with a 3 recovery rating to Viking Cruises Ltd.’s proposed offering of $600 million of senior secured notes. The 3 rating indicates an expectation for meaningful recovery (50%-70%; rounded estimate: 60%) for lenders in the event of a default.

The agency also downgraded the rating on Viking’s outstanding senior secured notes to B+ from BB- and the rating on its senior unsecured notes to B- from B, in line with the lowering of the issuer credit rating. The recovery rating remains 1, indicating an expectation for very high recovery (90%-100%; rounded estimate: 95%).

“Although the senior secured notes offering improves Viking's liquidity as the company navigates the suspension of cruises through at least June 30, 2020, because of the Covid-19 pandemic, it increases leverage. We no longer believe our measure of adjusted leverage will improve below 7.5x in 2021, even in our assumed recovery scenario. As a result, we are lowering the issuer credit rating on Viking Cruises to B- from B,” S&P said in a press release.

The outlook is negative.

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