16th Oct 2019 08:28
(Alliance News) - Moody's Investors Service on Tuesday said it expects Carnival's credit metrics to remain solid, despite some performance headwinds.
Moody's has reiterated its A3 senior unsecured and Prime-2 commercial paper ratings for the FTSE 100 cruise operator, with the outlook remaining stable.
"The affirmation reflects our expectation that despite some earnings pressure caused by several macroeconomic factors and geopolitical events, Carnival's credit metrics will remain appropriate for the rating category," said Pete Trombetta, a lodging and cruise analyst at Moody's.
"Carnival's management team has a good track record of prudent balance sheet management and we expect the company will maintain leverage within its publicly stated target of 2.0 times to 2.5 times."
The company, the world's largest cruise operator, benefits from geographical diversity, Moody's said, while consumer demand will likely stay at acceptable levels.
"Ratings could be upgraded should Carnival evidence a commitment to maintaining debt levels in line with earnings and cash flow through a predictable economic and industry downcycle such that Carnival maintains retained cash flow to net debt above 40% and earnings before interest, tax, and amortisation to interest expense above 12 times," added Moody's.
A downgrade could come if retained cash flow to net debt stays below 25%, or Ebita to interest expense stays below six times.
Carnival shares were 0.3% higher in early trade on Wednesday in London at 3,137.00 pence each.
By George Collard; [email protected]
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