Fitch Affirms Carnival's A-Ratings

Tuesday, March 27, 2007
Fitch Ratings affirmed Carnival Corp.'s issuer default rating, bank credit facility and senior unsecured debt at an investment grade of "A-," due to its strong liquidity position. The rating service also affirmed the Miami-based company's short-term debt at "F2," which indicates a relatively low credit risk.

Fitch said possible negative influences include cyclical softness in Caribbean demand, Carnival's shareholder-friendly capital allocation decisions, a potential consumer-driven economic slowdown, and volatile fuel prices. Fitch said that the company's recent joint venture agreements with European tour operator TUI AG and Spanish travel company Iberojet, as well as its proposed sale of the Windstar Cruises brand, are unlikely to affect its ratings. Fitch noted that Carnival plans to spend about $3 billion to $3.5 billion annually on its shipbuilding program over the next few years. The rating service said the program is expected to generate about 8 percent annual capacity growth that could be leveraged to a slightly higher annual cash flow growth rate. Fitch said the export credit financing will fund much of the shipbuilding program at rates below 5 percent. Carnival has about $1 billion of maturities in 2007 that is expected to be refinanced. Carnival shares dropped 35 cents to $47.77 in midday trading on the New York Stock Exchange. Source: Houston Chronicle

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