Billionaire activist investor Carl Icahn’s holding company has been cut to junk status by S&P Global Ratings.
The agency cut Icahn Enterprises LP to BB+ -- its highest non-investment grade rating -- from BBB-, adding that the company’s outlook is stable.
S&P said the ratings change was due primarily to Icahn Enterprises’s elevated loan-to-value ratio, which it expected to remain between 45 percent and 60 percent over the next 12 months.
Some of the heightened leverage was due to deterioration in certain of the company’s portfolio companies, including fuel transporter CVR Energy Inc. and industrial products and services provider Federal-Mogul Holdings Corp., S&P credit analyst Clayton Montgomery said in the report Tuesday. It was also due to a “substantial” decrease in cash at Icahn Enterprises, he said.
The New York-based company’s shares are down 14 percent this year. Icahn Enterprises has a market valuation of about $7.1 billion.