Moody's cuts SM Energy

Moody's Investors Service said it downgraded SM Energy Co.'s corporate family rating to Caa1 from B3 and probability of default rating to Ca-PD from B3-PD, senior unsecured rating to Ca from Caa1

“The downgrade reflects the company's intention to issue new secured debt to exchange for up to $1.681 billion of its senior unsecured notes at a 35% to 50% discount to par, a transaction Moody's views as a distressed exchange and thus, a default,” Moody’s said in a press release.

Once SM completes the exchange, the agency said it would append a --/LD (limited default) signifier to SM's PDR for three days to acknowledge the default.

The outlook is negative.

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