Summary
Royal Caribbean Cruises Ltd. (RCL) announced on December 19, 2019, a significant financing agreement for its third Icon-class ship, which is slated for delivery in the second quarter of 2025. This agreement secures an unsecured, U.S. dollar-denominated term loan, bolstered by substantial guarantees from official export credit agencies of Finland (Finnvera plc) and Germany (Euler Hermes). This robust guarantee structure is a key takeaway, indicating strong support for the vessel's financing and potentially de-risking a portion of the capital expenditure. The financing structure itself is noteworthy, with the loan covering up to 80% of the vessel's purchase price plus associated guarantee premiums. The amortization schedule and maturity, extending twelve years post-delivery, align with the long-term asset life of cruise ships. The blended interest rate, with a significant portion fixed and another portion tied to LIBOR, provides a degree of interest rate certainty while incorporating some floating rate exposure. Investors should view this as a proactive step in managing capital for future fleet expansion and a demonstration of access to favorable financing terms.
Key Highlights
- 1RCL entered into a credit agreement on December 18, 2019, to finance its third Icon-class ship, scheduled for delivery in Q2 2025.
- 2The financing is structured as an unsecured U.S. dollar-denominated term loan.
- 3The loan is significantly guaranteed by Finnvera plc (Finland) and Euler Hermes (Germany), covering 95% of their respective portions.
- 4The facility can finance up to 80% of the vessel's purchase price plus 100% of guarantee premiums.
- 5The loan matures twelve years after the ship's delivery.
- 6Approximately 60% of the loan carries a fixed interest rate of 3.29%, with other portions at floating rates (LIBOR + 0.85%) or a fixed rate of 4.34% at RCL's election.
- 7The agreement includes customary covenants and events of default.