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Royal Caribbean Cruises was upgraded to BB- by S&P citing favorable booking and strong ticket pricing that will see a faster improvement in leverage. The cruise company said that booking volumes in Q2 was significantly higher than the same period in 2019 and at record pricing with strong demand for North America and Europe. Also, strong onboard revenues exceed pre-pandemic levels. S&P expects Royal Caribbean’s 2023 revenue to be 20-25% higher than 2019 levels and also its previous 15-20% forecast. Also, EBITDA is set to significantly exceed 2019 levels by 20-25%. Thus, its leverage this year is expected to improve to 5.4x vs. the previous forecast of 7x. Further strength in Royal Caribbean’s financials has been seen in its $1.4bn in operating cash flow generation in Q2. It used this and its excess cash to repay ~$1.6bn of debt. including prepayment of its $392mn 11.5% 2025s. It also redeemed a $300mn 11.5% note in July.
Its 7.5% 2027s ticked higher by 0.6 points to 101.69, yielding 7.02%.