S&P rates NCL notes BB-

S&P said it rated NCL Corp. Ltd.’s planned $500 million of senior secured notes due 2028, BB- with a 1 recovery rating. The 1 recovery rating indicates very high (90%-100%; rounded estimate: 95%) recovery in default.

NCL plans to use the proceeds to repay a portion of the loans outstanding under its term loan A facility that will become due in January 2024.

“The proposed financing is largely debt for debt, and it extends the company's maturity profile, although we expect the company will incur higher borrowing costs based on current higher market rates. As a result, the proposed transaction does not affect our B issuer credit rating. In addition, strong forward bookings suggest demand for NCL's cruises in 2023 could absorb higher capacity and occupancy likely recover to historical levels by summer, causing a material improvement in the company's EBITDA and credit measures from unsustainable levels,” S&P said in a press release.

The outlook is negative.

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