S&P gives Royal Caribbean notes B

S&P said it gave its B issue-level rating to Royal Caribbean Cruises Ltd.'s expected $1 billion of senior unsecured notes due 2026. The recovery rating is 4 reflecting an expectation of average (30% to 50%; rounded estimate: 35%) recovery for noteholders in default.

Royal intends to use proceeds for general corporate purposes, including the replenishment of liquidity as a result of its partial redemption of its 11˝% secured notes with proceeds from a common stock issuance earlier this year and the refinancing of future debt maturities.

“Because Royal's planned transactions are largely debt for debt, it does not impact our B issuer-credit rating or negative outlook on Royal. We expect the transaction will reduce Royal's interest burden because we believe the interest rate on the proposed unsecured notes will likely be significantly lower than the 11˝% rate on the secured notes Royal plans to redeem,” the agency said in a press release.

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