Sixers' owner's firm's fund faces 'junk' ratings

Standard & Poor's Corp. has cut the credit ratings of Apollo Investment Corp., a publicly-traded affiliate of Philadelphia 76ers owner Josh Harris' Apollo Global Managment, to BBB- today, and may cut it again to below investment-grade "to reflect the company's losses and deteriorating asset quality," S&P anaylst Sebnem Caglayan said in a report today.

The company reported realized and unrealized losses of $234 million last year, according to S&P. Unsecured and second-lien secured debt account for nearly two-fifths of the company's investments, leaving it in a "weak risk position." Loan losses zoomed to 6.5% in December, from 1.4% in March, and will likely "continue to increase" as oil and gas prices stay low and energy borrowers default. Plus, too much of Apollo Investments debt was issued by a single company, Merx Aviation Finance, S&P concluded..

Another Apollo affilate, Apollo Strategic Investment Fund LP, now invests around $84 million in city pension funds, after losing $15 million last year. The city paid Apollo nearly $50,000 a month in fees, despite the losses. The company referred questions to its outside spokespeople, who weren't immediately available.