Moody's Downgrades $3.1 Billion in Carnival Notes After Collateral Release

Moody's Ratings has downgraded approximately $3.1 billion of Carnival Corporation's senior notes to Ba1 from Baa2, moving them from investment-grade to high-yield status after the debt became unsecured following a release of collateral.

What Happened

The downgrade affects three specific note issues and was triggered by a provision in the debt indentures, according to Moody's. Carnival received a second investment-grade rating from another rating agency on June 25, 2026, which automatically caused the collateral backing these notes to be released. As the notes are no longer secured, their credit rating was adjusted to reflect their new, unsecured status.

The specific notes downgraded are:

• $192 million of 7.875% notes due 2027
• $2.4 billion of 4.0% notes due 2028
• $500 million of 7.00% notes due 2029

Outlook and Company Rating Unchanged

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Despite the downgrade of these specific notes, Moody's maintained its Ba1 corporate family rating and its overall Ba1 senior unsecured rating for Carnival. The ratings agency also affirmed that the company's outlook remains positive.

This indicates that the ratings action is a technical adjustment related to the security of these particular bonds, rather than a reflection of a deteriorating financial position for the cruise line operator. For investors, it means these specific bonds now carry a higher risk profile due to the lack of collateral, but the agency's view on Carnival's overall creditworthiness has not changed.

Financial Projections

Moody's projects a strengthening financial profile for Carnival, forecasting the company's debt-to-EBITDA ratio will decline to near 3.5x by the end of fiscal 2026 and approach 3.0x by the end of 2027. The agency anticipates the company will generate strong free cash flow with operating margins in the mid-teens.

Carnival is the world's largest cruise company, accounting for approximately 40% of the industry's annual revenue. According to the source, the company held cash and marketable securities totaling $2.2 billion as of May 31, 2026.