Citi: Limit exposure to Teva bonds

Teva Photo: Reuters Ammar Awad

Citi's recommendation on Teva's debt is "Underweight."

Citi is negative on exposure to Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) bonds. Citi analysts last week began to cover Teva's debt and the recommendation is "Underweight." Citi added "we struggle to see positive credit catalysts, while the company is exposed to operational headwinds and litigation risk and we calculate would only return to investment rating in 2021."

At the end of the first quarter of 2018, Teva's debt stood at $30.8 billion, down from $32.5 billion at the end of 2017. Most of the debt was raised to buy Actavis in 2016 and recently Teva raised a $4.5 billion bond (in dollars and euros) and used the money to repay bank debt and a bond with a close redemption date.

Citi said that "Teva is the issuer with the tightest bond spreads in the US with the highest yield pharma broadly in line with Valeant on a leverage adjusted basis , wider than most other BB-rate names in healthcare outside pharma. Upside risks are opportunistic assets sales, improving US generic prices environment, generic competitors failing to capture market share from Teva's Copaxone 40mg. Downside risks: results of restructuring plan below expectations, continued challenging US generics market, negative outcomes on litigations related to opioids and price fixing."

Published by Globes [online], Israel business news - - on June 3, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

Teva Photo: Reuters Ammar Awad
Teva Photo: Reuters Ammar Awad
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