S&P rates Viking Cruises notes B-, view to negative

Standard & Poor's said it revised the outlook on Viking Cruises Ltd. to negative from stable.

The company's B+ corporate credit rating also was affirmed.

The agency also said it assigned a B- rating to parent company MISA Investment Ltd.'s proposed $175 million senior notes due 2018 with a recovery rating of 6, indicating 0% to 10% expected default recovery.

The recovery rating reflects the structural subordination of the notes issued at the holding company.

The company plans to use the proceeds from the notes primarily to fund a dividend to shareholders, S&P said.

The agency also said it revised the recovery rating on Viking's $250 million senior notes due 2022 to 3, indicating 50% to 70% expected default recovery, from 4, which indicates 30% to 50% recovery expectation.

The revision reflects a lower level of priority debt to finance ship deliveries than previously expected, resulting in higher recovery prospects for these notes, S&P said.

The agency also said it affirmed its B+ rating on the notes, in accordance with our notching criteria.

The negative outlook revision reflects an aggressive financial policy regarding dividends to shareholders, S&P said, and an expectation that consolidated total lease-adjusted debt-to-EBITDA will spike to the 6x range in 2013 as a result of the debt-financed dividend.

This is a level of leverage that is weak compared with the 6x threshold in line with the current B+ rating on Viking, the agency said.

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