S&P Downgrades Icahn Enterprises to 'B+' on Sustained Investment Losses

S&P Global Ratings has downgraded Icahn Enterprises L.P. (NASDAQ: IEP) to 'B+' from 'BB-', pushing the activist investor's holding company deeper into speculative, or "junk," territory. The rating agency cited persistent and significant losses in the company's investment fund as the primary driver for the downgrade, which weakens its overall business position.

Details of the Downgrade

S&P lowered its issuer rating on Icahn Enterprises and its issue rating on the company's senior secured notes to 'B+' from 'BB-', while maintaining a recovery rating of '3'. The ratings outlook was kept as stable.

The downgrade reflects a continued negative trend in IEP's investment portfolio. According to S&P, the investment funds declined 18.2% during the first half of 2026. This performance extends a pattern of annual losses recorded since 2019, with the exception of a modest positive return in 2025.

Weakening Financial Metrics

The value of IEP's investment fund has eroded significantly, falling to $2.0 billion as of June 30, 2026. This marks a steep decline from $3.2 billion in December 2023 and $5.1 billion at the end of 2018, as reported by the rating agency. In the first half of 2026 alone, the fund recorded a net loss of $591 million, driven by losses on energy and broad market hedges.

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Key financial indicators have also deteriorated:

• Holding Company Liquidity: Dropped to $2.3 billion as of June 30, 2026, from $4.1 billion at the end of 2024.
• Loan-to-Value (LTV) Ratio: Weakened to approximately 61%, although S&P expects this to stabilize within its 45%-60% long-term target range.
• Cash Flow: The company's cash flow adequacy ratio fell to 0.54x in 2025 from 1.53x in 2024, as cash distributions from subsidiaries were insufficient to cover holding company expenses.

Liquidity and Debt Outlook

To bolster its finances, Icahn Enterprises recently announced the $700 million sale of its subsidiary Pep Boys. S&P noted this will provide a near-term liquidity boost and support debt repayment. The company faces a $1.38 billion note maturity in May 2027, which the agency expects will be addressed through a combination of repayment and refinancing.

However, S&P cautioned that Icahn Enterprises faces elevated refinancing risks for its $2.3 billion in debt maturing in 2029 if its operating performance does not improve meaningfully in the coming quarters.