S&P cuts Carnival notes

S&P said it lowered its issue-level ratings on Carnival Corp.'s senior unsecured debt that has parent guarantees but not subsidiary guarantees to B- from B. The agency also revised the recovery rating on this debt to 5 from 4.

“The lower issue-level and recovery ratings are the result of Carnival's recent upsizing of its senior unsecured notes due 2027 to $3.5 billion from the expected $2.5 billion under our prior analysis. This results in less enterprise value available to cover Carnival's remaining senior unsecured debt with only parent guarantees, weakening recovery prospects for these lenders,” the agency said in a press release.

The senior unsecured notes due 2026 and 2027 and its unsecured convertible notes due 2023, benefit from both parent and subsidiary guarantees, whereas Carnival's remaining unsecured debt benefits from only parent guarantees. The 5 recovery rating indicates an expectation for modest (10%-30%; rounded estimate: 20%) recovery in default.

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