Moody's: Royal Caribbean cut to SGL-3

Moody's Investors Service said it changed Royal Caribbean Cruises' speculative grade liquidity rating to SGL-3 from SGL-2 and affirmed the company's senior implied rating at Ba2.

Moody's said this change is driven by near term cash outflows that may require the company to rely significantly on its $1.0 billion revolving credit facility.

Specifically, in the first quarter of 2005, Royal Caribbean's Liquid Yield Option Notes aggregating about $700 million can be put by noteholders and in the second quarter of 2005 the company has required amortization payments of about $785 million due.

If the LYONs are put by noteholders, Royal Caribbean may need to draw up to $600 million under its revolving credit facility in the second quarter.

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