S&P rates Royal Caribbean notes BB

S&P said it assigned a BB and 3 recovery ratings on Royal Caribbean Cruises Ltd.’s proposed guaranteed unsecured notes and placed the rating along with all its Royal Caribbean ratings on CreditWatch with negative implications.

“The proposed notes offerings will place added pressure on Royal’s recovery next year and lead to potentially higher expected adjusted leverage in 2021. In addition, there remains a high degree of uncertainty around when and how the company will resume operation. Although the incremental debt will enhance Royal’s liquidity, due to high borrowing costs, we believe the additional funded debt will further reduce operating cash flow, placing greater pressure on Royal’s recovery path next year,” S&P said in a press release.

The agency said it sees the company’s adjusted leverage being least 5x in 2021 below the downgrade threshold for the BB rating.

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