S&P cuts SM Energy

S&P said it downgraded SM Energy Co. to SD from CCC+ and its senior unsecured notes due in 2022 and senior unsecured notes due in 2024 to D from B-. The unsecured notes due in 2026 and 2027 and the secured notes due in 2025 are unchanged.

“The downgrade reflects SM Energy's recently disclosed debt exchanges, which cumulatively over the past few quarters represent a meaningful proportion of the original principal. Since the beginning of 2020, the company repurchased $90 million of its 6 1/8% unsecured notes due in 2022 and 5% unsecured notes due in 2024 for approximately 78% of par on average. We view these exchanges as a selective default because investors received less than originally promised without adequate compensation. We believe it will be a challenge for SM Energy to refinance its 2022 and 2024 maturities on favorable terms,” S&P said in a press release.

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