S&P rates American Real Estate notes BB

Standard & Poor's said it assigned its BB ratings to the proposed $300 million senior unsecured notes issued by American Real Estate Partners LP and American Real Estate Finance Corp. The issue is guaranteed by American Real Estate Holdings LP.

At the same time, S&P affirmed its BB long-term counterparty credit and senior unsecured debt rating on American Real Estate Holdings following the company's announcement that it had agreed to acquire additional oil and gas, gaming, and entertainment assets in transactions with affiliates of Carl. C. Icahn.

S&P said the rating on the debt issue reflects the guarantee by American Real Estate Holdings and benefits from the strong consolidated capital in excess of $1.4 billion despite higher pro forma leverage of 0.7x with the proposed transaction. Other positive factors include the company's successful track record and significant investment contacts of majority owner Icahn.

The rating also takes into account the company's large investment exposure to just a handful of businesses, dependence on one key principal, significant history of affiliate transactions and corporate governance issues, and the inability to predict the future portfolio mix.

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