S&P rates SM Energy notes B+

S&P said it assigned a B+ rating and 5 recovery rating on SM Energy Co.'s proposed $500 million senior unsecured notes due 2026.

The 5 recovery rating indicates 10% to 30% expected default recovery.

The proceeds will be used to finance the company’s recently announced acquisition of leasehold interests in the Midland Basin and for general corporate purposes, S&P said.

The ratings reflect the company's fair business risk profile and aggressive financial risk profile, the agency said.

The ratings also consider the company's participation in the highly cyclical oil and gas industry, balanced production mix between liquids and natural gas, good internal reserve replacement and production from multiple basins, S&P said.

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