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Bond Market News
Teva Pharma Upgraded to BB by S&P
November 20, 2024
Teva Pharma was upgraded by a notch to BB from BB- by S&P. The upgrade reflects improvement in leverage and growth prospects of the company. Teva has improved its leverage to ~5.0x for the twelve months ending 30 September 2024, and plans to use its annual free cashflow of around $2bn primarily for debt reduction, including payments related to ongoing legal liabilities. This includes $1.55bn in off-balance-sheet securitization and $3.9bn in legal liabilities, mostly from opioid settlements. After five consecutive years of revenue declines (2018-22), the Teva has expanded its revenue for six consecutive quarters, a trend that S&P expects it to continue. They believe it will be supported by growth in its branded business and stability in its generics business. Teva is committed to significantly reducing debt as seen by its past actions such as suspending dividends, share repurchases, and acquisitions.
Teva’s bonds traded stable with its 3.15% 2026s at 95.6, yielding 5.67%.
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