Fitch Ratings has downgraded Teva Pharmaceutical Industries Ltd.'s (NYSE: TEVA; TASE: TEVA) ratings, including the company's Long-Term Issuer Default Rating (IDR), by two grades, from 'BBB-' to 'BB'. This is a non-investment or junk rating. The Rating Outlook is Negative, meaning that a further downgrade could be in the offing.
The ratings apply to approximately $34.7 billion of debt at Sept. 30, 2017.
Fitch says that this rating action reflects the belief that Teva is facing significant operational stress at a time when it needs to reduce debt from the August 2016 acquisition of Actavis' generic drug business. "Pricing pressure in Teva's North American generics segment and erosion of sales of Copaxone will continue to weigh on free cash flow in the near term, requiring the company to continue to sell assets or find external capital resources to meet debt obligations in 2018 and 2019 and beyond," Fitch states. "The Negative Outlook reflects the uncertainty around whether the company's challenges will deepen and the nature and timing of the company's response to such challenges such as whether Teva would seek equity financing to reduce its debt burden," Fitch's statement adds.
Fitch's action follows a downgrade of Teva by S&P last week to BBB-, one level above junk status.
Teva's share price is currently down 1.21% on the Tel Aviv Stock Exchange at NIS 42.58.
Published by Globes [online], Israel business news - www.globes-online.com - on November 7, 2017
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