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Carnival cut to junk by Moody's while cruise suspension drags on

 Publish date: Tue, 19 May 2020, 1:13 PM

Carnival Corp was cut to junk by Moody's Investors Service amid a prolonged suspension of the cruise company's operations because of the Covid-19 pandemic.
 
Moody's assigned the company a Ba1 rating, the highest junk grade, and lowered its rating on Carnival's senior unsecured notes by one notch to the same level.
 
It said in a statement Monday that Carnival's financial metrics "are not indicative of an investment-grade rating for the foreseeable future" as cruises remain suspended and any recovery is likely to be slow.
 
The credit grader said it expects sailing to be suspended beyond the current July 24 no-cruise order issued by the Centers for Disease Control and Prevention.
 
Ship capacity will be "modest" in 2020 and early 2021, hurting profitability, Moody's said.
 
Carnival still carries investment-grade ratings from S&P Global Ratings, though it said it was considering downgrading the cruise line.
 
A second junk rating would make Carnival a "fallen angel" and mean its debt would be dropped from investment-grade bond indexes.
 
Miami-based Carnival said last week that it plans to cut jobs, reduce salaries and shorten work weeks to cope with the suspension.
 
Last month, the company netted US$6.4 billion from new bonds, senior convertible notes and common stock to help it weather months without customers.
 
 - Bloomberg
 

 

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