March 26, 2009
Standard & Poor's cuts cruise giants' ratings
Standard & Poor's Rating Services today lowered its credit ratings on two cruise giants.
The ratings agency lowered its long-term corporate credit rating on Miami, Fla.-based Carnival Corp. to 'BBB+' from 'A-'. The issue-level ratings on the company's long-term debt, including debt issued by U.K.-based Carnival plc, were also lowered by one notch. The rating outlook is negative. The agency affirmed our short-term ratings on the company at 'A-2'. Carnival Corp. and Carnival plc operate as a dual listed company (DLC), jointly referred to as "Carnival.
In a separate ratings action the agency lowered its corporate credit rating one Miami, Fla.-based Royal Caribbean Cruises Ltd. (RCL) to 'BB-' from 'BB'. The issue-level ratings on the company's debt were also lowered by one notch. At the same time, these ratings were removed from CreditWatch, where they were placed with negative implications Jan. 30, 2009. The rating outlook is negative.
In the case of Carnival, Standards & Poors said the downgrade followed the recent first-quarter earnings announcement, in which Carnival revised its forecast for declines in net revenue yields on a current dollar basis for fiscal 2009 (ending November) to down 16% to 18%, from a forecast of down 11% to 15% provided in the fourth-quarter 2008 earnings announcement.
In the case of Royal Caribbean, "The downgrade reflects our revised expectations for 2009 and 2010, which now project net revenue yields to decline in the mid-teens percentage area in 2009," said Standard & Poor's credit analyst Ben Bubeck.