As global credit ratings agency Standard and Poor’s (S&P) placed Royal Caribbean Cruises (RCC) on “creditwatch with negative implications”, RCC stressed it remains committed to the purchase of the Grand Lucayan resort and the creation of a cruise port destination in Grand Bahama.
In a statement sent to Guardian Business responding to questions about the S&P opinion, timelines for the Grand Bahama developments and its cruise outlook with COVID-19 vaccinations on the horizon in the U.S., the company would only respond to its commitment to the Grand Lucayan and cruise port plans.
“Royal Caribbean remains committed to moving the project in Grand Bahama forward, working closely with our partners and the Bahamian government,” the company’s statement noted.
“We are excited about the prospects of finalizing this agreement.”
The government and RCC along with its partner ITM – which have formed the entity Holistica – hope to have closed the Grand Lucayan deal before the end of the year.
While it is understood that Holistica intends to spend less and take a longer time to begin the development of the resort, Minister of Tourism Dionisio D’Aguilar said he wouldn’t describe the government’s sale deal for the hotel as “a bad deal”, as has been described by Michael Scott, chairman of Lucayan Renewal Holdings Limited – the special purpose vehicle created by the government for the sale of the resort.
S&P’s creditwatch negative position hinges on RCC’s recent cancellation of cruise travel for much of the first quarter of 2021, the future prospects for travel demand and vaccinations against COVID-19.
RCC announced last week that it is suspending sailings through the end of February 2021 for most global itineraries.
The cruise lines continue to work through the stringent guidelines set by the US Centers for Disease Control and Prevention (CDC) before they can begin taking on paying passengers.
“The creditwatch listing reflects the heightened likelihood that we will lower our rating within the next few months, given a high degree of uncertainty as to Royal’s recovery path and its ability to substantially improve leverage in 2022 from what will likely be unsustainable levels in 2021,” S&P noted in its statement.
“The creditwatch listing also incorporates a slower restart of cruises in many markets, the potential for further suspensions even when operations do resume and the possibility the pandemic could alter consumers’ demand for travel and cruising over the longer term because of concerns around contracting the coronavirus.
“We expect Royal to burn more cash relative to our previous expectations and for leverage to remain very high in 2021.
“As a result, we are placing all ratings on Royal Caribbean Cruises Ltd., including our ‘B+’ issuer credit rating, on creditwatch with negative implications.”
The credit rating agency said the company could also face port closures and pricing pressures because of short booking windows.
“Additionally, even once sailings resume, we believe that cruise operators will continue to face heightened risks of additional suspensions in the absence of a widely available vaccine or effective treatment, which could be around mid-2021 under our base case assumptions,” S&P stated.
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source https://thenassauguardian.com/royal-caribbean-stresses-commitment-to-gb-project/
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