Carnival Corp. Senior Unsecured Notes Rated 'B' (Recovery Rating: '4') On Proposed Refinancing

SAN FRANCISCO (S&P Global Ratings) May 18, 2022--S&P Global Ratings today assigned its 'B' issue-level rating to U.S.-based cruise operator Carnival Corp.'s proposed $1 billion senior unsecured notes due 2030. The recovery rating is '4', indicating our expectation of average (30%-50%; rounded estimate: 45%) recovery for noteholders in the event of a default. Carnival plans to use proceeds from the notes to prefund a portion of the $2.9 billion of principal payments due in fiscal 2023. Since the transaction is largely debt for debt, it does not affect our 'B' issuer credit rating or negative rating outlook on Carnival. We continue to expect adjusted credit measures in fiscal 2022 (ending Nov. 30) to remain very weak given a gradual resumption

...- We assigned our 'B' issue-level rating to Carnival's proposed $1 billion unsecured notes with subsidiary guarantees. The recovery rating is '4', indicating our expectation for average (30%-50%; rounded estimate: 45%) recovery for noteholders in the event of a default. - All other issue-level ratings are unchanged. Simulated default assumptions: - Our simulated default scenario contemplates a default occurring by 2024 due to a significant decline in cash flow from permanently impaired demand for cruises following the negative publicity and travel advisories during the COVID-19 pandemic, a prolonged economic downturn, or increased competitive pressures. - We include in our assumption of unsecured claims that benefit from subsidiary guarantees new ship debt that we expect Carnival to incur before the year of default. - We estimate gross enterprise value at emergence of about $24 billion by applying a 7x multiple to our estimate of EBITDA at emergence. We use a multiple that is at the high...

Ratings Action