S&P cuts Royal Caribbean

Standard & Poor's said it lowered the corporate credit rating on Royal Caribbean Cruises Ltd. to BB from BB+. Ratings were removed from CreditWatch, where they were placed with negative implications Nov. 7.

The outlook is negative.

"The ratings downgrade reflects our expectation that the currently weakened state of the economy and the pullback in consumer spending, which has intensified in recent months, will result in meaningfully weaker credit metrics over the next several quarters," S&P analyst Ben Bubeck said in a statement.

The BB rating reflects aggressive financial risk profile, capital intensive nature of the cruise industry and the sensitivity of the travel and leisure sector to economic cycles, the agency said.

These factors are somewhat offset by the company's solid brands, a relatively young and high-quality fleet of ships, high barriers to entry in the cruise industry and an experienced management team, the agency noted.

The BB rating also reflects adequate liquidity position, supported by access to government-guaranteed financing arrangements to fund ship deliveries to the extent necessary, S&P said.

Total adjusted debt-to-EBITDA ratio was 4.7x as of Sept. 30.

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