S&P downgrades SM Energy

Standard & Poor's said it lowered the ratings on SM Energy Co.'s senior unsecured notes with various maturities to BB- from BB.

The agency also said it revised the recovery rating on the notes to 5 from 4, indicating 10% to 30% expected default recovery.

SM Energy's BB corporate credit rating and stable outlook are unchanged.

The downgrades are due to the company's increased secured revolver debt capacity resulting from its higher borrowing base, which is senior in ranking to the unsecured notes in the event of a payment default, the agency said, and the higher amount of debt resulting from the recent $500 million notes issuance.

The ratings reflect the company's weak business risk as a midsize player in the volatile and capital-intensive oil and natural gas exploration and production industry, S&P said.

The ratings also reflect the company's significant financial risk, the agency said.

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