Standard & Poor's Global Ratings on Tuesday cut its rating on Carl Icahn's investment firm to junk territory, citing the firm's weak investment performance and high borrowing levels.
The one-notch downgrade places Icahn Enterprises LP at double-B-plus, with a stable outlook. Mr. Icahn, best known as a 1980s corporate raider, owns about 90% of Icahn Enterprises. He wasn't immediately available for comment.
S&P credit analyst Clayton Montgomery said Tuesday that the downgrade reflects the weak share price performance of Icahn Enterprises's key portfolio companies, including CVR Energy Inc. and Federal Mogul. Those stocks are off 48% and 31%, respectively, over the past 12 months.
Mr. Montgomery also pointed to Icahn Enterprises's elevated loan-to-value ratio, which S&P projects to remain between 45% and 60% over the next 12 months.
Shares in Mr. Icahn's firm, meanwhile, are down 43% over the past 12 months.
Icahn Enterprises reported investments with a fair market value of about $1.8 billion as of March 31, down from $3.4 billion at the end of the year, according to regulatory filings. The rate of return was negative 12.8%.
Icahn Enterprises has reported negative returns for the past two years.
Mr. Icahn, who like George Soros has warned of a possible repeat of the 2008 financial crisis, on Monday reported he had exited numerous investment positions in the first quarter.
The stock traded fractionally lower on Tuesday afternoon.
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