Fitch rates TUI Cruises B-, notes CCC

Fitch Ratings said it assigned TUI Cruises GmbH a first-time issuer rating of B- and its planned €300 million of senior unsecured notes an expected CCC rating with an RR6 recovery rating. The RR6 rating reflects significant higher- ranking debt ahead of the bonds resulting in no recoveries of the bonds under the agency’s waterfall analysis, Fitch said.

“TUI Cruises is a mid-sized cruise ship business with two well-recognized brands, Mein Schiff and HLC, operating in the premium and luxury segments of the market, respectively. Its customer base is primarily Germany, which is the largest and one of the fastest growing markets in Europe. In addition to its strong market position with an estimated 35% market share, a concentrated customer base enables the company to better customize its product offering to customer tastes, resulting in high repeat bookings at 60%-70% of total customers in 2020,” Fitch said in a press release.

The bonds proceeds will be used to shore up the company’s liquidity.

The outlook is positive. Successful execution of TUI’s ramp-up phase is expected to result in a better financial profile in 2022, which is reflected in the positive outlook, Fitch noted.

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