Last week, credit rating agency Fitch announced that it was leaving Teva Pharmaceutical Industries' rating unchanged, but changing the outlook from Negative to Stable. Now Moody's has done something similar. Moody's has left its rating of Teva's debt at Ba2 (which is not investment grade), but the rating outlook is upgraded from Negative to Stable.
The background is the assessment by Moody's analysts that Teva's liquidity is adequate for range of possible settlement outcomes of the proceedings against it in the opioids affair in the US. Although a settlement outline was agreed two years ago, it has not been signed, and the legal exposure continues to weigh on Teva's share price and on its credit rating.
Moody's says that Teva is rapidly and consistently reducing its debt thanks to the free cash flow that it is generating, and thus reducing its leverage from the peak level it reached in 2019. Moody's sees the debt:EBITDA ratio, which reached more than 8 at its height and was 5.5 at the end of September, falling below 5 in 2022. Moreover, the agency estimates that Teva's latest debt recycling means that it will be able to repay the debt that comes due up to 2024 in full from its free cash flow.
Published by Globes, Israel business news - en.globes.co.il - on December 16, 2021.
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