S&P rates American Real Estate notes

Standard & Poor's said it assigned its BB rating to the proposed $300 million senior unsecured notes issued by American Real Estate Partnership LP and American Real Estate Finance Corp. At the same time, S&P assigned its BB long-term counterparty credit rating to American Real Estate Holdings LP, a 100% owned subsidiary of American Real Estate Partnership

S&P said the rating on the debt deal reflects the guarantee by American Real Estate Holdings, the company's significant capital base of $1.6 billion, low leverage of 0.5x with this debt issuance, successful track record, and significant investment contacts of majority owner Carl C. Icahn.

These factors are offset, the agency said, by the large investment exposure to just a handful of businesses, the company's dependence on one key principal, significant history of affiliate transactions and corporate governance issues, and the inability to predict the future make-up of American Real Estate Partnership and its wholly owned subsidiary American Real Estate Holdings.

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