Royal Caribbean & NCL on Credit Watch

Norwegian Cruise Lines & the Royal Caribbean Group have respectively confirmed that they’ve been placed into a credit watch. This follows after the creditors that sustain both Royal Caribbean & NCL have concerns about announced extensions. Both companies confirmed that their extending closures of onboard operations, with cases of Covid-19 rising drastically in America. Creditors concerns arise after learning that the CDC isn’t requiring these extensions on operation, with the decision being made internally.

S&P Global Ratings, the creditor that financially sustains Royal Caribbean Group & Norwegian Cruise Line Holdings, announced that both had been placed onto credit watch. This decision followed after repayment of loans were evidently unavailable after the extensions. Both NCL & RCG maintain substantial debt, which was acquired between February to September 2020.

S&P Global Ratings issued a press release, which indicated that lower credit ratings is being offered to the Royal Caribbean Group & Norwegian Cruise Lines Holding. The press release suggested uncertainty behind both companies’ recovery path, and capability of returning leveraged funds by 2022. When questioned on being forced into credit watch, neither NCL nor RCG issued statements.

The Debt

Royal Caribbean & Norwegian Cruise Lines have continued to allow their ships to dock, meaning that hundreds of millions have been lost monthly. It was estimated that throughout October 2020, more than $290 Million was lost for Royal Caribbean. The amount lost for NCL wasn’t indicated publicly. It’s known that overall debts acquired throughout the pandemic for Royal Caribbean was $8.4 Billion, meaning their debt increased to $17.6 Billion. That amount will likely increase in small increments following their credit watch. Unless operations can resume shortly, both Royal Caribbean & Norwegian Cruise Lines are doomed to fail. Concerns from industry personnel indicate that temporary bankruptcy could be evoked if operations aren’t resumed by Summer 2021.