TEXT-S&P rts SandRidge Energy's $500 Mil sr unsecd nts 'B'
Aug 06 - Standard & Poor's Ratings Services today assigned issue-level and recovery ratings to SandRidge Energy Inc.'s planned senior unsecured $500 million note offering. We rated the senior unsecured notes 'B' (same as the corporate credit rating) and assigned a '4' recovery rating to the notes, indicating our expectation of average (30% to 50%) recovery for lenders in the event of a default. SandRidge also plans to issue a $250 million tack-on to the company's existing senior unsecured notes rated 'B' due 2021.
The company plans to use proceeds from the notes to fund the tender of its $350 million floating rate notes due 2014, and to fund a portion of 2013 capital spending. Pro forma for the new issuance and refinancing, SandRidge has about $3.9 billion of funded debt.
The ratings on Oklahoma City-based SandRidge Energy reflect our view of the company's "weak" business risk and "highly leveraged" financial risk, incorporating an aggressive growth strategy demonstrated by capital spending well in excess of internally generated cash flow and by acquisitions. The ratings also reflect the company's strategic shift to increase oil production from natural gas in response to weak near-term natural gas prices and toward greater geographic diversity.
RELATED RESEARCH AND CRITERIA
-- Criteria Guidelines For Recovery Ratings, Aug. 10, 2009.
-- Criteria Methodology: Business Risk/Financial Risk Matrix Expanded, May 27, 2009
-- Corporate Ratings Criteria 2008, April 15, 2008
-- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008
SandRidge Energy Inc.
Corporate credit rating B/Stable/--
Planned $500 mil sr unsecd nts B
Recovery rating 4
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