Royal Caribbean's Oasis Gets Finnish Reprieve

(MoneyWatch)  For a while it looked like Royal Caribbean's new 220,000-ton, $1.2 billion Oasis of the Seas, the world's largest cruise ship, was doomed as its financing dried up.

The cruise industry has been hit by the recession, causing deep discounts and slim-to-none profits, so it wasn't surprising when financing for the behemoth cruise ship -- still being built in Turku, Finland -- petered out. But fate intervened and Royal Caribbean didn't go much further than the shipyard itself to get the loan guarantees it needed. It negotiated with Finnvera, an export-credit branch of the Finnish government. Finnvera is now guaranteeing 95 percent of loans and one of its subsidiaries, Finnish Export Credit, will provide 40 percent of the ship's financing. The move is so unheard of that UBS analyst Robin Farley said, "This is the first time we can recall a government agency not just guaranteeing a portion of the outstanding debt, but also providing actual financing."

The ship is being built in a Finnish shipyard, providing thousands of jobs and boosting the country's economy. It only makes sense that the country benefitting most from Royal Caribbean's new megaship became its benefactor. My guess is that financing for Royal Caribbean's Allure of the Seas, Oasis' sister ship slated for a 2010 delivery, will also be found in Scandinavia.

Photo of Oasis of the Seas construction courtesy of Royal Caribbean