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Bond Market News
Royal Caribbean Upgraded to Ba1 by Moody’s
November 14, 2024
Royal Caribbean Cruises was upgraded by a notch to Ba1 from Ba2 by Moody’s. The upgrade reflects the company’s strong performance as it leads the cruise industry in recovering from the impact of the pandemic. Since the industry’s demand recovery began in 2022, Royal Caribbean has experienced the fastest growth in passenger volumes and revenue. In 2024, its passenger volumes are expected to be 31% higher than in 2019, and net revenue 50% higher. While debt has increased by $9bn since 2019, the company has managed to maintain moderate financial leverage. Its debt-to-EBITDA is expected to be around 3.5x at end- 2024, improving slightly to 3.0x by 2026. The company has good liquidity, with at least $450mn in cash and strong annual operating cash flow of $5bn. The company also has significant revolving credit commitments and plans to use Export Credit Agency (ECA) guarantees for vessel financing, helping mitigate financing risk.
Its dollar bonds traded stable with its 7.5% 2027s at 106.1, yielding 5.23%.
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