The senior unsecured rating of Miami-based cruise operator Royal Caribbean Cruises (RCL) has been upgraded to Baa3 from Ba1, LGD 4, according to Moody’s ratings agency.
The rating outlook is stable.
Moody’s said that the upgrade acknowledges RCL’s continued strong earnings growth which has led to an improvement in operating margins and credit metrics.
The upgrade also recognizes that the agency expects RCL’s earnings growth to remain strong as a result of the full year impact of capacity expansion in 2016, its pipeline of new ship deliveries, and a strong booked position.
Additionally, Moody’s expects RCL’s debt to EBITDA to remain stronger than 3.75x and EBITA to interest expense to remain above 4.0x.
“Royal Caribbean is committed to maintain credit metrics at levels appropriate for the Baa3 rating. While we anticipate they will resume share repurchases, we expect they will only be financed with debt to the extent that debt to EBITDA remains below their 3.5x stated leverage target,” Maggie Taylor, Senior Vice President with Moody’s, commented.
RCL operates six brands – including three through joint ventures. The six brands operate a combined 49 cruise ships with an aggregate capacity of 123,270 berths.