Feb. 27 (Bloomberg) -- Royal Caribbean Cruises Ltd., the company building the world’s largest cruise ship, is in talks to obtain increased loan guarantees from Finland and possibly a direct government loan to help finance the vessel’s delivery.

The Oasis of the Seas is scheduled to be completed by December. Miami-based Royal Caribbean, the world’s second- largest cruise operator, “is comfortable we’re going to be able to get this financing done,” investor relations chief Ian Bailey said yesterday.

The government’s larger role is aimed at making the $1.24 billion project more attractive to private lenders, Bailey said in a telephone interview. Discussions with lenders over Oasis, under construction by STX Europe’s Finnish shipyards, are ahead of Royal Caribbean’s normal schedule, he said.

“We’re taking every possible action to make this the strongest possible basket for the lending groups,” Bailey said. “Obviously a higher guarantee and direct participation from the government entity is going to send a strong signal and provide more reassurance.”

Near-frozen credit markets have prompted Finland and other nations to boost state financing and other supports for businesses. The Oasis and $1.4 billion sister ship Allure of the Seas, due late next year, are part of about $5.4 billion of new ships on order that Royal Caribbean will have to finance, according to a regulatory filing.

Finnvera, a state-owned company that provides export credits to Finnish businesses, agreed to guarantee 80 percent of Royal Caribbean’s loans to buy Oasis and Allure when the shipbuilding contracts were signed.

‘Not Routine’

The agency has given loan guarantees of more than 80 percent in exceptional cases “but it’s not a routine thing that we do,” Topi Vesteri, Finnvera’s executive vice president responsible for export credit guarantees, said in an interview. He declined to discuss whether the agency was in talks with Royal Caribbean.

“It used to be that an 80 percent sovereign guarantee was all that you would need,” Bailey said. “If you can provide a higher number, it’s going to be beneficial to the lenders.”

Royal Caribbean uses a broad group of lenders in the U.S. and Europe to finance its vessels, Bailey said. The company usually begins putting syndicated loans together six months before delivery, so “the fact that we’re already in negotiations with our lending group and with Finnvera is an indication that we’re well ahead of the timeframe.”

The Finnish government this year allowed Finnvera to finance export credits under a temporary program to help the country’s trade. Finnvera would finance only part of the credits together with banks, and Oasis could “in theory” qualify, Vesteri said. No loans have been extended yet, he said.

Funding Requests

Demand for Finnvera’s export credit guarantees has surged almost 400 percent in the past year, Chief Executive Officer Pauli Heikkilae said.

“We began seeing applications for projects in hundreds of millions of euros, and we are being asked for funding as well as guarantees,” Heikkilae said in an interview. “Banks don’t have the capability to finance things alone without guarantees anymore.”

Heikkilae declined to comment on any Oasis-specific negotiations, citing as Vesteri did Finnish laws and U.S. securities regulations.

“We are aware that Royal Caribbean is having these talks, we are not involved,” Martin Landtman, head of STX Europe’s Finnish shipyards, said in a phone interview from Helsinki. “We are not concerned or worried about the situation in any way.”

Royal Caribbean and larger rival Carnival Corp. have stopped paying shareholders dividends to conserve cash as the global recession hurts vacation bookings, ticket prices and onboard spending. RCL fell 70 cents, or 10 percent, to $6.00 at 4:02 p.m. in New York Stock Exchange composite trading. The shares have lost 84 percent in the past 12 months.

Biggest Ships

Royal Caribbean is also building four ships at Germany’s Meyer Werft GmbH shipyard. It has agreements with Euler Hermes Kreditrersicherungs AG, the German government’s export credit agency, for 95 percent of the financed amount, according to a regulatory filing.

Oasis, costing $230,000 a berth, and Allure at $260,000 a berth, will each carry 5,400 guests, span 16 decks, and weigh 220,000 gross tons, making them the largest cruise ships ever built.

STX Europe, Europe’s largest shipbuilder previously known as Aker Yards ASA, was delisted from the Oslo exchange earlier this month after the South Korean STX Group bought the Norwegian company in October 2007.

To contact the reporters on this story: Beth Jinks in New York at bjinks1@bloomberg.net; Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net

Last Updated: February 27, 2009 16:09 EST