Moody's lowers Carnival

Moody's Investors Service said it snipped the ratings of Carnival Corp. and Carnival plc, including its corporate family rating to B1 from Ba1, probability of default rating to B1-PD from Ba1-PD, senior secured rating to Ba2 from Baa3, senior secured second lien rating to B1 from Ba1 and senior unsecured rating to B2 from Ba2.

The company's speculative grade liquidity rating of SGL-2 remains unchanged. The agency revised the outlook to negative from under review. These actions conclude the review for downgrade that was initiated on July 14, Moody’s said.

"The downgrade reflects Moody's expectation that Carnival's metrics will remain weak over at least the next two years with debt/EBITDA well above 6.5x and EBITA/interest expense below 2x," stated Pete Trombetta, a Moody's lodging and cruise analyst, in a press release."

“Carnival's liquidity, including about $8.8 billion (pro forma for its recent second-lien debt issuance), provides the company sufficient runway to get through this period of unprecedented earnings pressure,” the agency said.

The negative outlook reflects Carnival's very high leverage and the uncertainty around the recovery in demand that would enable the company to lower leverage to below 5.5x, Moody’s said.

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