S&P downgrades Teva, debt

S&P said it lowered its long-term corporate credit rating on Teva Pharmaceutical Industries Ltd. to BB from BBB- and removed the rating from CreditWatch, where it was placed with negative implications on Feb. 2.

The outlook is stable.

At the same time, the agency lowered the issue-level rating on the senior unsecured debt to BB and assigned a 3 recovery rating. S&P also removed the issue-level rating from CreditWatch with negative implications.

The 3 recovery rating reflects an expectation for meaningful (50%-70%; rounded estimate 50%) recovery in the event of a payment default.

“The action on Teva reflects a series of lower-than-expected operating results following the 2016 acquisition of Actavis Generics for $33.4 billion in cash and additional equity,” the agency said in a news release.

“We initially believed the acquisition would deliver a material boost to Teva's future generic first-to-market performance, as well as provide a level of scale that would give Teva a competitive advantage over peers like Mylan and Perrigo.”

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