Teva's stock tumbles toward 20-year low; Moody's turns negative on drugmaker's 'junk'-rated debt

Shares of Teva Pharmaceutical Industries Ltd. tumbled 9.7% toward a 20-year low, after Moody's Investors Service revised its outlook on the drug maker's already "junk" credit rating to negative from stable. Trading volume was 31.7 million shares compared with the full-day average of about 20.4 million shares. Moody's affirmed Teva's Ba2 corporate family rating, which is two notches below investment-grade status. "The negative outlook reflects Moody's concern over Teva's persistently high leverage and large refinancing needs in light of its rising exposure to opioid-related litigation," Moody's said. The rating agency said that while it believes Teva has sufficient liquidity to repay 2020 debt maturities, which is more than $2 billion. However, Moody's doesn't expect Teva to generate enough cash flow to repay the approximately $4.2 billion of debt maturing in 2021, so failure to refinance those maturities well in advance cut put further pressure on Teva's rating. "Teva's exposure to opioid litigation remains a key uncertainty, posing risk to its ability to refinance at attractive interest rates," Moody's said. The stock, which is on track to close at the lowest price since November 1999, has tumbled 58.8% year to date, while the S&P 500 has gained 13.8%.

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