RCL – Base Case CDS 70bps, Base Case iCDS 27bps, Negative Case iCDS 43bps, 2032 6.250% Bond YTW of 4.774%, iYTW of 3.924%, Baa2 Rating from Moody’s, IG3+ (equivalent to A1) Rating from Valens, Low Refinancing Need
March 2, 2026
- Credit markets are overstating RCL’s credit risk with a YTW of 4.774% relative to an Intrinsic YTW of 3.924%, while slightly overstating risk with a CDS of 70 bps relative to an intrinsic CDS of 27bps. Furthermore, Moody’s is overstating RCL’s fundamental credit risk with its Baa2 credit rating four notches below Valens’ IG3+ (A1) credit rating.
- Incentives Dictate Behavior™ analysis highlights mostly positive signals for equity holders as compensation metrics should drive management to focus on improving all three value drivers: sales, margins, and asset utilization, which could lead to Uniform ROA expansion and increased cash flows available for shareholders. In addition, most management members are material owners of RCL equity relative to their annual compensation, indicating they may be aligned with shareholders to pursue long-term value creation for the company.
- Earnings Call Forensics™ analysis of the firm’s Q4 2025 earnings call (1/29/2025) highlights management is confident their net yields grew across all key products on capacity growth and driven by new and existing hardware.