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S&P upgrades NCLH, refinancing eliminates highest cost debtS&P upgrades NCLH, refinancing eliminates highest cost debt

S&P Global Ratings upgraded Norwegian Cruise Line Holdings' credit on improved metrics, and the company refinanced its $650m backstop commitment with Apollo Funds and eliminated its highest rate debt.

Anne Kalosh, Editor, Seatrade Cruise News & Senior Associate Editor, Seatrade Cruise Review

March 12, 2024

1 Min Read
Credit: Seatrade Cruise News

The issuer credit rating went to B+, a notable improvement, and the company's senior secured debt ratings were raised to BB/BB- while its unsecured debt went up two notches to B.

What the ratings mean

'B'  and 'BB' are still a non-investment grade ratings but 'B' indicates a company currently has the capacity to meet its financial commitments, though adverse business, financial or economic conditions may impact its position. 'BB' is higher, indicating less financial vulnerability.

S&P highlighted several factors for the upgrade, including NCLH's current forward-booked position, increased capacity, occupancy recovery and higher pricing, providing good revenue and cash flow visibility for 2024.

In addition, S&P noted the company’s leverage will benefit from higher revenue, EBITDA and cash as it generates a full year of operations from its 2023 ship deliveries, without incurring incremental ship delivery debt in 2024.

Highest rate debt eliminated

Further enhancing its financial position, NCLH refinanced its $650m backstop commitment with Apollo, from a secured to an unsecured commitment.

And, as part of this refinancing, the company repaid its $250m 9.75% senior secured notes due 2028, eliminating its highest interest rate debt.

'The upgraded ratings are an important recognition of the strength of our business and our ability to reduce leverage,' NCLH EVP/CFO Mark Kempa said. This refinancing, which reduces interest costs while releasing the related collateral, is 'a clear demonstration of our commitment to de-levering and improving our balance sheet,' he added.

About the Author

Anne Kalosh

Editor, Seatrade Cruise News & Senior Associate Editor, Seatrade Cruise Review

Anne Kalosh covers global stories, reporting both breaking and in-depth news on cruising's significant people, places, ships and trends. A sought-after expert on cruising, she has moderated conferences around the world, including the high-profile State of the Industry panel at Seatrade Cruise Global. She created and led the acclaimed itinerary-planning case study for Seatrade's cruise master classes held at Cambridge and Oxford universities. She has been the cruise columnist for AFAR.com, and her freelance stories have appeared in a wide range of publications, from The New York Times to The Miami Herald.

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