Moody's affirms Star Cruises

Moody's Investors Service said it affirmed the B1 corporate family rating of Star Cruises Ltd.

The outlook remains negative.

The affirmation is in response to the announcement that the Genting Bhd./Star Cruises consortium has won the bid to build an integrated resort project on Sentosa, Singapore, Moody's said.

While the project will increase Star Cruises' exposure to development and execution risks, as well as capital needs in the medium term, such risks are expected to be moderate and will not materially alter its current business and risk profiles given its 25% stake in this project, the agency said.

Moody's also said the company may have to rely on additional bank borrowings to part fund its equity investment in the Sentosa project. The announced $200 million rights issue will improve the company's capital structure and liquidity, the agency said, and as a result Star Cruises' overall financial profile will remain unchanged with an adjusted debt-to-EBITDA ratio of about 8x to 10x, Moody's said.

The outlook is negative, reflecting Moody's concerns that Star Cruises' financial metrics may remain under pressure due mainly to uncertainty over NCL Corp.'s ability to turn around its weak performance in the near term.

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