S&P gives NCL revolver, notes BB-

S&P said it assigned its BB- issue-level and 1 recovery ratings to NCL Corp. Ltd.'s planned $790 million of senior secured notes due 2029 and proposed upsized $1.2 billion revolving credit facility due 2026. The 1 recovery rating indicates very high (90%-100%; rounded estimate: 95%) recovery in default.

Concurrently, the agency lowered its issue-level rating on the company's outstanding senior unsecured notes to CCC+ from B- and revised the recovery rating to 6 from 5. The 6 recovery rating indicates negligible (0%-10%; rounded estimate: 0%) recovery in default.

“Although NCL is not issuing any incremental debt as part of this transaction, the planned $325 million increase in its revolving credit facility will raise the amount of senior secured debt outstanding in our hypothetical default scenario–because we assume it is 85% drawn at the time of default–which reduces the recovery prospects for its senior unsecured lenders,” S&P said in a statement.

NCL plans to use the proceeds with cash on hand to repay the balance under its term loan A facility, which is due in January 2025.

The outlook is stable.

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