Chantiers de L'Antique, the wholly owned shipping subsidiary of French infrastructure supplier Alstom, last week brought to market its securitization of future payments for the delivery of cruise ships. Merrill Lynch acted as arranger and bookrunner for the $580 million transaction, called Cruise Ship Finance.

Under the terms of the deal, Chantiers securitizes payments for three cruise ships under construction for Royal Caribbean Cruises Ltd., the world's second biggest cruise ship operator. Chantiers will use the proceeds from the transaction as working capital for constructing the vessels, each worth $340 million.

In the event of a non-payment from RCCL, Chantiers can terminate the contract and transfer the ownership of the ships to the SPV, for the ships to be sold on. Alstom will provide a guarantee to RCCL that Chantiers will complete construction of the ships to the stipulated specifications.

Moody's Investors Service and Standard & Poor's rated the deal Baa2 and BBB, reflecting the unsecured risk of RCCL, the credit quality of Merrill Lynch as guarantor of the currency swap provider and Alstom's position as guarantor of performance.

The deal was split into euro and dollar denominated notes, both with 1.6-year average lives. The E350 million notes priced at 125 basis points over three-month Euribor, while the spread on the $250 million notes was 130 over.

Despite the lengthy launch process, a syndicate official at Merrill declared himself satisfied with the way it had gone. "The deal went pretty well and given the distribution, I think the pricing was appropriate," he said. "Given the Alstom angle, the French investor base was important. I'd say that a number of other European markets were interested, but the core support was French."

The official added that the deal had been sold into a range of banks and funds across European and U.S. accounts.

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