S&P rates SM Energy notes BB

Standard & Poor's said it assigned its BB issue-level rating to SM Energy Co.'s proposed $350 million senior unsecured notes due 2021. The agency said it assigned a 4 recovery rating to this debt, indicating an expectation of average recovery in a payment default.

At the same time, S&P said it revised the recovery rating on the company's existing $350 million senior unsecured notes due 2019 to 4 from 3, which indicates an expectation of average recovery for lenders in a payment default.

The BB rating incorporates S&P's expectation that SM Energy will use the proceeds from the proposed notes to fund the redemption of its senior convertible notes, which are callable on or after April 6, 2012, and for general corporate purposes, the agency said

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