S&P Puts Pershing Square On Creditwatch Negative

Standard & Poor's has placed 'BBB' issuer credit and senior unsecured issue ratings on Bill Ackman's Pershing Square Holdings, Ltd.

on CreditWatch due to a big drop in the market value of Valeant Pharmaceuticals Intl Inc

. The ratings agency said Pershing Square's' net asset value has dropped substantially, largely because of a precipitous decline in the market value of Valeant. Credit analyst Trevor Martin said Pershing Square's net asset value (NAV) was $5.3 billion at the end of October 2015 and $3.8 billion on March 15, 2016, primarily because of the steep drop in Valeant Pharma's stock price, which fell about 50 percent on March 15. Related Link: www.benzinga.com/analyst-ratings/analyst-color/16/03/7713367/valeant-breaches-40-after-2017-guidance-correction-on-tu As a result of the weakness in the portfolio since October, Pershing Square's debt to total assets has increased to above 20 percent from about 15 percent. "We could lower the rating if Valeant files for bankruptcy or if PSH materially reduces free cash before Valeant's stock price has substantially recovered. Even if the position were to stabilize, we could still downgrade PSH if the investment performance of the portfolio as a whole deteriorates further," Martin added. Martin expects to have the information to resolve the CreditWatch in the next 90 days, but he could extend the CreditWatch period if that is not the case. Meanwhile, Pershing Square issued the following statement on March 15 over its investment on Valeant. "We are going to take a much more proactive role at the company to protect and maximize the value of our investment. We continue to believe that the value of the underlying business franchises that comprise Valeant are worth multiples of the current market price." Shares of Pershing Square were up 1.08 percent at $13.15.