S&P rates Royal Caribbean notes BB-, B+

S&P said it assigned its BB- issue-level rating and 1 recovery rating to Royal Caribbean Cruises Ltd.'s planned $1 billion of senior secured notes due 2029. The 1 recovery rating indicates very high (90%-100%; rounded estimate: 95%) recovery in default. The agency also gave B+ issue and 2 recovery ratings to the company’s planned $1 billion guaranteed unsecured notes due 2029. The 2 recovery rating indicates substantial (70%-90%; rounded estimate: 85%) recovery.

Royal intends to use the proceeds and cash on hand, to redeem its $1 billion of 10 7/8% senior secured notes due 2023 and its $1 billion of 9 1/8% guaranteed notes due 2023, as well as to pay transaction fees and expenses.

“The proposed debt-for-debt refinancing is a net positive because it will extend Royal's maturity profile by refinancing nearly all of its remaining June 2023 maturities. The company has demonstrated continued access to capital through its recent convertible note and unsecured note issuances,” S&P said in a press release.

The outlook remains negative.

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