S&P rates Concho notes BB

Standard & Poor's said it assigned a BB issue-level rating and 3 recovery rating to Concho Resources Inc.'s (BB/stable) $400 million of senior notes due 2022. The 3 recover rating indicates the expectation of a meaningful (50% to 70%) recovery in the event of default.

The company will use the proceeds to repay debt under its revolving credit facility.

S&P revised the recovery ratings on Concho's existing unsecured debt to 3, indicating the expectation of meaningful recovery (50% to 70%) in the event of a default, from 4. The issue ratings remain unchanged at BB.

The ratings on Concho reflect the company's weak business risk profile, which is largely a result of the cyclical and capital-intensive nature of the industry and the geographic concentration of reserves, the agency said.

The ratings also incorporate Concho's good reserve replacement metrics, competitive cost structure and adequate liquidity, the agency added.

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