Teva Pharmaceuticals Refinances Debt Following Investment Grade 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) last week joined Fitch and Moody's in assigning Teva an investment grade rating, raising its debt rating from BB-plus to BBB-minus. The company announced its intention to issue senior unsecured notes denominated in both euros and U.S. dollars. The proceeds from this issuance will be used to redeem existing bond series and for general corporate purposes.
Among the bonds Teva plans to redeem are those with a 6.75% interest rate due in 2028, totaling $1.25 billion, and another series with a 7.875% interest rate due in 2029, valued at $398 million. Additionally, up to $450 million will be allocated to redeem sustainability-linked bonds maturing in 2027 with a 4.75% interest rate, and up to €1.25 billion will be used to purchase similar euro-denominated bonds due in 2030.
As of the end of the second quarter, Teva's total debt stood at $16.6 billion, with approximately 27% classified as short-term. This debt refinancing is expected to extend the company's weighted average debt maturity and potentially lower interest expenses, following the recent rating upgrades. Chief Financial Officer Eyal Desheh stated that the multiple rating upgrades reflect the successful execution of the 'Return to Growth' strategy and significant progress in debt reduction and strengthening the company's financial profile.
Teva, led by CEO Richard Francis, is listed on both the New York and Tel Aviv stock exchanges with a market capitalization of $42.4 billion. 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 support its potential 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.
