S&P Global Ratings upgraded Carnival Corp. to 'BBB-' from 'BB+' in its latest rating action, pointing to strong forward bookings for 2026 and early 2027 that, in the agency's view, give the cruise operator improved visibility into revenue and cash flow.
S&P expects Carnival's funds from operations (FFO) to debt to reach approximately 25% in 2026 and to exceed that level in 2027. The upgrade follows the company reporting that it has sold 93% of its 2026 inventory, and that booking volumes for 2027 are running ahead of last year's levels at higher price points.
Operational performance through the second quarter contributed to the positive view. Carnival beat its second-quarter guidance, driven by stronger onboard revenue and disciplined cost control. At the same time, the company trimmed its fiscal-year 2026 net yield guidance to 1.75% growth on a constant-currency basis, down from a prior 2.75% estimate. S&P notes that this revision was prompted by weaker close-in bookings on Mediterranean sailings, which were disrupted by conflict-related impacts in the Middle East.
On leverage metrics, S&P forecasts that Carnival's adjusted debt to EBITDA will be roughly 3.3x by the end of fiscal 2026, comfortably below the agency's 3.75x threshold for an upgrade. The rating agency also projects revenue growth of about 3.3% for fiscal 2026, while expecting modest declines in EBITDA attributable to elevated fuel costs linked to the effective closure of the Strait of Hormuz.
Fleet delivery plans also factor into S&P's assessment. Carnival does not expect to take delivery of any ships in fiscal 2026, and anticipates receiving one ship per year from fiscal 2027 through 2033. S&P characterizes this cadence as a measured schedule, noting it represents a reduction from the three to five annual deliveries recorded in fiscal 2018-2022.
The agency believes the slower delivery profile will allow Carnival to generate significant cash flow for deleveraging, despite incremental ship debt taken on to finance newbuilds. Management's public target is to sustain leverage below 2.75x, and S&P projects that expanding cash flow will support increased shareholder returns over time.
S&P assigned a stable outlook to the rating. The agency's view rests on expectations that continued forward bookings and moderate yield improvement will lift FFO to debt above 25%, keep leverage in the low-3x area, and maintain EBITDA interest coverage above 6x over the coming 12 months. In connection with the action, S&P raised all of its ratings on Carnival, including the issuer credit rating and issue-level ratings on the company's unsecured debt.
Overall, the upgrade reflects improving demand visibility and a capital deployment plan tied to measured fleet growth and stronger cash generation.