Moody’s rates Viking Cruises notes Ba2

Moody's Investors Service said it assigned a Ba2 rating to the proposed $675 million senior secured note issuance of VOC Escrow Ltd. (subsidiary of Viking Cruises Ltd.).

At the same time, the agency affirmed Viking's B1 corporate family rating, B1-PD probability of default rating and existing B3 senior unsecured rating (including a proposed $275 million add-on).

The outlook is stable.

After the closing of the transaction, VOC Escrow will merge into Viking.

Moody’s said the affirmation of Viking's ratings reflects its view that despite the half-turn increase in leverage resulting from the proposed transaction, visibility into 2018 indicates strong growth in Viking's Ocean segment and earnings improvement in its River segment, that will enable the company to reduce leverage to below the Moody's-adjusted leverage downgrade trigger of 5.75 times in early 2019.

Ocean segment growth will be driven in part by the addition of a new ship delivered in September 2017 and one expected in both 2018 and 2019, the agency explained.

Proceeds of the $950 million debt issuance – $675 million of proposed secured note issuance and $275 million unsecured note add-on – will be used to refinance about $675 million of secured ship debt, pay about $30 million of fees and expenses, and the remaining $242 million will be used for general corporate purposes.

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