Moody’s downgrades NCL

Moody’s Investors Service said it downgraded the ratings of NCL Corp. Ltd., including its corporate family rating to Ba2 from Ba1, its probability of default rating to Ba2-PD from Ba1-PD, its senior secured bank facility rating to Ba2 from Ba1, senior unsecured rating to B1 from Ba2 and speculative grade liquidity rating to SGL-3 from SGL-1.

The downgrades conclude the review for downgrade started on March 11, the agency said.

“The downgrade reflects the unprecedented impact the global spread the coronavirus (Covid-19) is having on the cruise industry, including the suspension of all sailing operations for NCL’s brands through May 10,” stated Pete Trombetta, a Moody’s lodging and cruise analyst, in a press release.

“Our base case assumption is that cruise operations in the U.S. are suspended through June 30, resulting in highly negative free cash flow and that there will be a slow recovery when sailings resume. While we expect that earnings will improve in 2021, we anticipate that bookings will be weak relative to 2019, which will result in NCL’s debt/EBITDA approximating 5.5x as of year-end 2021,” added Trombetta.

The outlook is negative.

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