Moody's cuts Royal Caribbean

Moody's Investors Service said it lowered Royal Caribbean Cruises, Ltd.'s corporate family and probability-of-default ratings to Ba2 from Ba1; senior unsecured notes, debentures and global notes to Ba2 (LGD4, 52%) from Ba1 (LGD4, 53%); and speculative-grade liquidity rating to SGL-4 from SGL-2.

The outlook is negative.

The agency said the downgrade is in response to the company's weak fourth-quarter earnings announcement, reduced guidance regarding net revenue yield trends in 2009 and the near-term need for Royal Caribbean to secure ship financing commitments to preserve liquidity. A decline in EBITDA combined with higher absolute debt levels at Dec. 31 increased the debt-to-EBITDA ratio to 5.1 times from 4.1 times.

In addition to the weakened earnings environment, the negative outlook reflects the risk that that industry supply growth could exacerbate downward price pressure and delay upward momentum when economic conditions improve and thereby depress earnings beyond 2009, Moody's added.

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