On Friday, international credit rating agency Moody's Investors Service downgraded the senior unsecured ratings of Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) and its subsidiaries to Ba2 from Baa3. Moody's also assigned a Ba2 Corporate Family Rating, Ba2-PD Probability of Default Rating, and SGL-3 Speculative Grade Liquidity Rating. The rating outlook is stable. This action concludes the rating review initiated on December 14, 2017.
"The downgrade of Teva's ratings to speculative grade reflects the challenge of managing its significant debt burden while facing a prolonged period of earnings erosion," said Moody's Assistant Vice President Morris Borenstein. "While Teva's cost restructuring program will help to partially offset declines, execution risk is high. In addition, we believe earnings declines from Copaxone and its US generics business will be severe, and that meaningful deleveraging to under 4 times gross debt/EBITDA will take several years to achieve."
Moody's thus joins Fitch Ratings, which downgraded Teva's debt to junk status last November.
Separately, Allergan announced on Friday that it had sold 1.555 million Teva shares at an average price of $20.03 per share on Wednesday last week. This reduces Allergan's holding in Teva to 6.8% (68.7 million shares). Allergan had announced in the past that it would gradually reduce the 10% holding in Teva, acquired when it sold its generic division Actavis to Teva in a shares and cash transaction in 2015.
Published by Globes [online], Israel business news - www.globes-online.com - on January 14, 2018
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