S&P rates Matador notes BB-

S&P said it assigned its BB- issue-level rating and 2 recovery rating to Matador Resources Co.'s proposed $700 million senior notes due 2026.

The 2 recovery rating indicates an expectation of substantial (70% to 90%; rounded estimate: 85%) recovery in the event of a payment default.

The company will use the net proceeds to help finance a cash tender for its outstanding senior notes due 2023 and for other general working capital needs.

S&P said the B+ issuer credit rating on Matador reflects its participation in the cyclical and capital-intensive oil and gas E&P industry, relatively small proven reserve and production base, and an expectation that it will outspend cash flows in the next two years as it continues to develop its assets.

These factors are offset by asset concentration in the prolific, oil-rich Permian Basin, above-average profitability forecast based on its high proportion of oil in overall production and moderate debt leverage, the agency said.

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