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Carnival (CCL Snr Unsec; B3 Pos, BB Now)

TRANSPORTATION
  • S&P echoing mgmt figures above for adj. net leverage at 4.6x and FFO to debt >15% by end of FY24 (Nov).
  • Notes advanced bookings for FY25 higher than FY24 in price & occupancy and notes carnival now targeting orders for 1-2 ships/yr vs. 2018-22 avg. of 3-5 - sees both supporting cash flows for continued deleveraging (it sees 4x by FY25).
  • Upgrade thresholds are net < 4.5x and FFO to debt >20%.
  • Note Moody's isn't stale on ratings (last commented in March) and is exacerbated by secured/unsecured penalisation of +3/-1 from the CFR of B2 - unclear if that will change on secured's being removed out (40% reduction already). S&P keeps it flat to baseline for unsecured and gives 2-notch uplift for secured (now IG).

29s +0.9pts (At Z+230), 30s +0.5pts into the close, no view from us on the name but we would flag cheap view on Finnair 29s (NR/BB+) is not far off at Z+224 and potential supply from secureds/TL's being refi'd out would need to be considered.
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