Moody’s upgraded Royal Caribbean Cruises Ltd. from B1 to B2 on the back of expectation that increased capacity, stronger pricing and improved cost controls will enable the issuer to lower debt/EBITDA to around 5x at the end of 2023. The company has paid down about $2bn of debt this year through the end of August using free cash flow. Royal Caribbean’s liquidity remains adequate with cash of about $725mn along with an undrawn revolver facility of about $3bn as at June 30. Moody’s expects that further capacity growth and strong booking trends could help Royal Caribbean in reducing its debt/EBITDA to below 4.5x by the end of 2024, leading to a revision of its outlook to positive.
Royal Caribbean’s bonds were flat with its
5.5% 2026 trading at 95.78 cents to the dollar, yielding 7.11%
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