Moody’s upgrades Teva rating to investment grade on debt cuts

Moody's Ratings has upgraded Teva Pharmaceutical Industries Limited's issuer rating to investment grade, changing it from Ba1 to Baa3. This decision reflects the company's growth strategy, which includes rising sales of branded drugs and an expanding pipeline, as well as efforts to reduce its debt through earnings growth and debt reduction.

Moody's anticipates further debt reduction over the next 12 to 18 months, which will bring its leverage metrics to levels that support an investment grade rating. The company's gross debt/EBITDA is currently around 4.0x, but Moody's expects it to fall below 3.75x due to anticipated debt reduction and earnings growth in 2027. As of June 30, 2026, Teva held approximately $3.7 billion in cash and cash equivalents, supported by a $1.8 billion unsecured revolving credit agreement that expires in April 2028.

Moody's rating also considers Teva's strong global presence, leading position in generic pharmaceuticals, and diverse product portfolio. The upgrade is based on factors such as Teva's reduced exposure to financial strategy and risk management considerations, sustained debt/EBITDA below 3.25x, and the company's ability to generate roughly $2.0 billion in free cash flow over the next year.