Moody's trims Royal Caribbean

Moody's Investors Service said it downgraded the ratings of Royal Caribbean Cruises Ltd., including its corporate family rating to B1 from Ba1, probability of default rating to B1-PD from Ba1-PD, senior secured rating to Ba2 from Baa3, and senior unsecured rating to B2 from Ba2. The company's speculative grade liquidity rating of SGL-2 remains unchanged.

Moody’s revised the outlook to negative from under review. This concludes the review for downgrade initiated on July 14, the agency said.

"The downgrade reflects Moody's expectation that Royal Caribbean's metrics will remain weak over at least the next two years with debt/EBITDA of above 6.5x and EBITA/interest expense below 3x," stated Pete Trombetta, a Moody's lodging and cruise analyst, in a press release.

"The downgrade also reflects our assumption that Royal Caribbean's available capacity will be modest in the first half of 2021 as the industry puts in place acceptable guidelines that satisfy the requirements for the Centers for Disease Control and Prevention (CDC) to lift its no sail order put in place in March," added Trombetta.

The outlook reflects the company’s high leverage and the uncertainty of the recovery in demand that will enable the company to de-lever to below 5.5x, Moody’s said.

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