Moody’s Ratings upgraded Teva Pharmaceutical Industries to investment grade on Tuesday, marking another step in the Israeli drugmaker’s efforts to strengthen its balance sheet after years of heavy debt.
The ratings agency raised Teva’s corporate credit rating to Baa3 from Ba1 and assigned a stable outlook.
Moody’s said the decision reflected progress in Teva’s growth strategy, including stronger performance from key branded drugs, an expanded development pipeline and continued debt reduction supported by earnings growth.
The agency also pointed to Teva’s diversified revenue base, improving operating margins, solid free cash flow and liquidity position. It said it expects the company to continue reducing debt over the next 12 to 18 months.
The move follows Fitch Ratings’ decision in May to also upgrade Teva to investment grade, further improving the company’s credit profile.
Teva Chief Financial Officer Eli Kalif called the Moody’s decision “a major milestone” in the company’s turnaround.
Moody's
(Photo: Reuters)
“This recognition, together with Fitch’s upgrade in May, reflects years of disciplined execution, continued debt reduction and a stronger financial profile,” Kalif said.
He added that the higher rating should give Teva greater financial flexibility and access to a wider pool of investors.
The upgrade may also support Teva’s eligibility for inclusion in major investment-grade fixed-income indexes, which can broaden demand for its debt among institutional investors whose mandates restrict them to higher-rated securities.
Teva has been pursuing what it calls its “Pivot to Growth” strategy, seeking to expand its innovative medicines business while maintaining its large generics operation. The company has also focused heavily on lowering debt and improving profitability.
Moody’s upgrade signals that those efforts have strengthened Teva’s financial standing enough to move the company back into investment-grade territory, though the agency’s stable outlook assumes further progress on debt reduction in the coming quarters.