Norwegian Cruise Line_OM_C&W Miami FINAL RSF


INDUSTRY OVERVIEW Vacation and leisure-travel is a secular growth market that ebbs and flows with the level of consumer discretionary income. Since the exit of the “peak pandemic” period from mid-to-late 2022 onward, the pent-up demand for vacation, including that which involves both domestic and international travel, has erupted. A trend that was seen early-on in this time of transition and reset was commercial airlines that were ill-equipped to manage such demand, be it a function of a lack of aircraft and flight crews, and/or operational personnel. Prices per ticket soared for even some of the shortest and routine flights, with major airliners setting high premiums on vacation destinations, resulting in reduced budgets for consumers before reaching their final destinations. For the cruise line industry, this trend was not felt as acutely as the intrinsic value-add for a consumer is that you are able to enjoy a vacation during the act of travel, prior to arriving at potentially one of many destinations on the same trip. Even before COVID-19, cruises presented a considerably lower all-in cost than traditional land-based vacations. That spread has only widened over the last 24 – 36 months.

ECA Financing Benefits & Key-Takeaways

An Export Credit Agency (“ECA”) is a national government-owned or affiliated entity that supports the export of domestic goods and services by providing financing to foreign purchasers of such goods and services. The primary purpose of an ECA is to increase the volume of exports from domestic producers by creating more accessible financing packages and risk-reduction products for large-scale project financing. This financing structure has become synonymous with the cruise line, shipping, rail and aerospace industries where large capital goods are required for fundamental business operations. Cruise ships are capital-intensive by nature and extremely complex to produce and maintain. The use of an ECA versus a traditional capital markets lending source for ship construction, and the economic value arbitrage that is implied can not be understated in terms of criticality to the operations and financial stability of a cruise-line operator like NCLH. ECAs provide a 10-to-15-year amortizing loan with a fixed interest rate, usually arranged by the sovereign rates where the ECA is domiciled plus a small spread – in other words, there is not a mechanism for the interest rate to increase even if sovereign rates change later. For NCLH specifically, its average ECA interest rate through 2028 is only 2.5% (1) compared to its corporate-level debt which is several times higher. The ability of NCLH and other cruise line operators to tap into this financing structure has kept overall blended cost of capital at demonstratively lower levels allowing for additional cushion during times of significant economic duress, as well as providing an avenue for consistent, scalable fleet and capacity growth.

Accretive Financing with Lower Cost, Fixed Rate Debt Contributing a Wide Array of Operational & Financial Benefits

Norwegian Caribbean Sailing (1)

4-Star+ Caribbean All-Inclusive Resort

4-Star+ Miami Hotel


$5,238 $1,656


Accommodations (2) Flight and Transfer (3)



Food and Drink


Included Included Included


Service Charges & Gratitudes

$463 $593

$436 $245

Provides Ability to Scale Fleet Growth and Berth Capacity Consistently

Taxes & Other (4)

Total Cost




Cruise Value Proposition vs. Land Vacation



Source: Norwegian Cruise Line Holdings Investor Presentation / Recurve Capital (1) Avg. of 7-Day Norwegian Bliss cruise in Caribbean West and Norwegian Encore Cruise in Caribbean East departing Feb. 2023 (2) Accommodations include cruise fare for family balcony (3) Flight includes airfare from NYC and ground transportation. NCL includes free air promotion for first guest (4) Taxes include fees and port expenses

Typical ECA Structure: Direct Loan (2)

ECA (Country X)

Stimulates Global Trade and International Economic Relationships

Cruise Update & Forecast: Annual Berth Growth (5)

In addition to overall lower costs, major cruise line operators and brands such as NCLH capitalize on an enormous addressable market by utilizing and growing their existing capacity, as well as expanding and diversifying the breadth of consumer experiences, offerings, and destinations which cater to nearly all types of potential passengers. Between 2022 and 2028, it is expected that global cruise capacity is forecasted to grow 19%. Additionally, according to Fincantieri, one of the largest shipyards serving the cruise industry, that capacity is expected to be undersupplied by 2025/2026. (5)

ECA Loan Agreement

726K 737K 746K

Loan Proceeds

678K 703K

625K 644K

582K 590K 604K

524K 540K


Ship Construction

Project Company (Host Country)

Exporter (Country X)

Goods / Services Sale Contract

Boosts ECA Country GDP, Job Creation

2016 2017 2018 2019 2020 2021

2022 2023F 2024F 2025F 2026F 2027F 2028F

(5) Data per CLIA Cruise Forecast / Recurve Capital; Capacity measured at beginning of the year

(1) Data per Recurve Capital (2) Data per Mayer Brown: Legal Update - ECA Financing

29 | Norwegian Cruise Line Holdings

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