Teva Pharmaceuticals Refinances Debt Following Credit Rating Upgrades

Teva Pharmaceuticals is undertaking a significant debt refinancing initiative, capitalizing on recent upgrades to its credit rating from three major international agencies. Standard & Poor's (S&P) joined Fitch and Moody's last week in assigning Teva an investment-grade rating, raising it from BB-plus to BBB-minus. This positive momentum has prompted Teva to announce its intention to issue new senior notes denominated in euros and U.S. dollars.

The funds raised from this issuance will be used to redeem existing bond series and for general corporate purposes. Specifically, Teva plans to redeem all outstanding bonds with a 6.75% interest rate due in 2028, which amount to $1.25 billion according to recent reports. Additionally, the company intends to redeem bonds maturing in 2029 with a 7.875% interest rate, totaling $398 million. Up to $450 million will be allocated to redeem sustainability-linked bonds due in 2027 with a 4.75% interest rate, and up to €1.25 billion will be used to purchase similar euro-denominated bonds maturing in 2030.

As of the second quarter's end, Teva's total debt stood at $16.6 billion, with approximately 27% classified as short-term debt. This debt refinancing is expected to extend the company's average debt maturity and potentially lower interest expenses, building on the recent rating upgrades. Chief Financial Officer Eli Kalif stated that the multiple rating upgrades reflect the successful execution of Teva's "Back to Growth" strategy, significant debt reduction, and a strengthened financial profile, enhancing financial flexibility for future investments.

Teva, led by CEO Richard Francis, has a market capitalization of $42.4 billion and is traded on both the New York and Tel Aviv stock exchanges. In a separate development, Teva's ordinary shares will begin trading on the New York Stock Exchange on September 14, replacing its existing American Depositary Shares (ADS). The company anticipates this move will broaden its global shareholder base and potentially facilitate its inclusion in major stock indices, such as the S&P 500. Teva is considered a U.S. company for SEC reporting purposes due to over 50% of its assets being located in the U.S. following its acquisition of Actavis.