S&P rates SM Energy notes BB

Standard & Poor’s said it assigned a BB rating and 4 recovery rating to SM Energy Co.’s proposed $400 million senior unsecured notes due 2022.

The 4 recovery rating indicates 30% to 50% expected default recovery.

The proceeds will be used from the proposed notes to repay borrowings on its credit facility and for general corporate purposes, S&P said.

The ratings reflect the company’s weak business risk as a midsize player in the volatile and capital-intensive oil and natural gas E&P industry, as well as the company’s intermediate financial risk and adequate liquidity, the agency said.

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