Moody's rates NCL notes B2

Moody's Investors Service said it has assigned a B2 senior unsecured rating to NCL Corp. Ltd.'s proposed $350 million 10-year issue. Moody's has also assigned a senior implied rating of Ba3 to NCL.

The outlook is stable.

The note proceeds will mainly be used to refinance existing debt and fund capital expenditure for new vessels.

Moody's said the rating reflects various credit strengths: a) NCL's position as the worlds third-largest cruise ship operator with an established brand, b) the presence of demographic trends supportive of the North American cruise industry, c) strong barriers to entry, and d) the expectation that its shareholders will provide NCL with financial support, if needed.

At the same time, Moody's said the rating reflects various credit challenges: a) NCL operates in the highly competitive North American cruise market, b) its Hawaii strategy remains untested and the depth of this market is unknown, c) NCL will become a net borrower because of the capex needed for its newbuilds and leverage will rise, and d) the presence of effective and structural subordination.

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