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Moody's to review Oceania, Regent for possible upgrade

Moody's to review Oceania, Regent for possible upgrade
Moody's placed the B2 corporate family ratings and B2-PD probability of default ratings for Oceania Cruises and Regent Seven Seas Cruises on review for possible upgrade. This follows the news that parent company Prestige Cruises International will be acquired by Norwegian Cruise Line Holdings.

B2 is judged as speculative and a high credit risk.

As part of Norwegian, Oceania and Regent will benefit from greater operating leverage, increased diversification and lower leverage, the ratings agency said.

Moody's also expects the 5% approximate $960m subordinated PIK sub debt held at the parent level will convert to equity when the acquisition closes, eliminating this obligation.

In addition, Moody's is reviewing the two cruise lines' individual debt instruments on review-direction uncertain pending information about the final capital structure of the combined entity and the relative amount of senior versus junior obligations.

The review for upgrade will focus on the ultimate disposition of the debt in each company's capital structure, the agency said.