Skift Take

Royal Caribbean is always playing catch up to Carnival, which may be a bumbling giant, but it's a bumbling giant in first place by market cap in the cruise industry.

Royal Caribbean Cruises Ltd. plans to repay about $526 million of ship-related debt due this year and will further reduce borrowings annually on its maturity schedule as it seeks to curb leverage to reach investment grade, according to Chief Financial Officer Jason Liberty.

The second-largest cruise operator refinanced a 745 million euros ($1.03 billion) European bond due in January with an unsecured term loan and a revolving credit line, according to a regulatory filing. It expects to add as much as $800 million of other ship obligations when its newest vessel is delivered later in 2014, Liberty said by telephone on Feb. 24.

Royal Caribbean expects total debt to be about $8 billion by the end of 2014, the same as last year, after it cut borrowings every year since 2010. The Miami-based cruise line operator is seeking to cut its 4.9 times net debt to earnings before interest, taxes, depreciation and amortization as of Dec. 31 to below 3.75 times to help attain an investment-grade rating, Liberty said.

“Our goal is to really just continue to pay down in line with our maturity schedule,” he said.

Royal Caribbean ended 2013 with $8.07 billion of total debt, according to data compiled by Bloomberg. The company is ranked Ba1 by Moody’s Investors Service and BB by Standard & Poor’s.

Speculative-grade bonds are rated below Baa3 by Moody’s and lower than BBB- at S&P. Carnival Corp. is the largest cruise operator.

Editors: John Parry and Mitchell Martin. To contact the reporter on this story: David Holley in New York at To contact the editor responsible for this story: Shannon D. Harrington at

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Photo Credit: The Royal Caribbean International's Explorer of the Seas is docked at Charlotte Amalie Harbor in St. Thomas, U. S. Virgin Islands, Sunday, Jan. 26, 2014. U.S. health officials have boarded the cruise liner to investigate an illness outbreak that has stricken at least 300 people with gastrointestinal symptoms including vomiting and diarrhea. Thomas Layer / AP Photo