State takes on heavy responsibility for new giant cruise liner


Finnish taxpayers can include a little request to the Almighty in their evening prayers that the American cruise line Royal Caribbean Cruises should live long and thrive in its somewhat beleaguered branch of the travel industry.

Royal Caribbean and the state-owned financing company Finnvera have reached agreement on a financing package for the line’s mega cruise vessel Oasis of the Seas, being built at the Turku yard of the South Korean-owned shipbuilders STX Europe, and the arrangement stacks a heavy responsibility on the shoulders of Finnish taxpayers.

Finnvera has announced that it is raising the coverage of the guarantee granted to RCCL for the post-delivery financing from its original offer of 80% to 95%. The guarantee will be given on a buyer credit of roughly EUR 800 million to be used for the payment of the final instalment of the vessel’s purchase price.

Finnvera’s guarantee exposure for the vessel is thus around EUR 760 million.
Such a high percentage is exceptional, with the 80% figure being more common.

What is even more unusual is the other part of the financing deal. Via its subsidiary Suomen Vientiluotto (Finnish Export Credit Ltd), Finnvera is fronting some 40% of the required 800 million euros.

In other words Finnvera is refinancing the project to the tune of around EUR 320 million.

The remaining 60% of the ship’s price-tag will be met jointly by three commercial banks: the French BNP Paribas and SEB and Nordea from Sweden. The loans are to be paid over 12 years.

As is the normal practice, RCCL has paid one fifth of the total sum of USD 1.31 billion (roughly EUR 1,000 million) on signing the contract.

The financing deal secured by the cruise line has prompted raised eyebrows among experts.

In the American newspaper USA Today, analyst Robin Farley from UBS regards the 95% guarantee as unusual and the 40% direct financing as unique.

The Oasis of the Seas was launched in November 2008, and the vessel’s maiden voyage is planned for December 2009. It will operate primarily on Caribbean cruises out of Fort Lauderdale in Florida.