Moody’s lowers Viking Cruise

Moody’s Investors Service said it lowered the ratings of Viking Cruises Ltd. and Viking Ocean Cruises Ltd., including its corporate family rating to B2 from B1, its probability of default rating to B2-PD from B1-PD, its senior secured rating to Ba3 from Ba2 and senior unsecured rating to Caa1 from B3. The ratings remain on review for further downgrade.

“The downgrade reflects the material earnings decline Viking will face in 2020 as it suspends operations through June 30, which will cause leverage to increase well beyond its downgrade trigger of 5.75x,” stated Pete Trombetta, Moody’s lodging and cruise analyst, in a press release.

“Viking has announced that it has suspended cruise operations through June 30, resulting in highly negative free cash flow, and that there will be a slow recovery when sailings resume. While we expect that earnings will improve in 2021, we anticipate that bookings will be weak relative to 2019, which will result in Viking’s debt/EBITDA approximating 6x as of year-end 2021,” added Trombetta.

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