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Teva’s Links to Opioid Epidemic May Triple Funding Costs

Laura Benitez
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Teva’s Links to Opioid Epidemic May Triple Funding Costs

(Bloomberg) -- Teva Pharmaceutical Industries Ltd. may pay triple its usual borrowing costs for its planned $1.5 billion bond sale as investors demand more for holding its debt on account of its links to the U.S. opioid epidemic, according to investors approached about the deal.

The Israel-based drugmaker is meeting with debt investors in London and New York this week for its first debt issue since being hit early this year with billions of dollars in potential liabilities from lawsuits. Bankers marketing the January 2025 U.S. and euro-denominated non call notes are targeting yields of around 8% and 6% respectively, according to the money-managers, who asked not to be identified because the information isn’t public.

The bonds, which will be used to refinance existing debt, are due to price early next week after the roadshow wraps up in Los Angeles on Monday.

The yields represent a significant increase in the company’s existing funding costs, which average about 2.1% for euro debt and 3.7% for U.S. securities, according to data compiled by Bloomberg. Much of its existing debt at low coupons was issued before the company was downgraded to junk status starting 2017.

Teva representatives were not immediately available to comment.

Bookrunners on the deal are BNP Paribas, Citi and Goldman Sachs.

Read more: Teva to Refinance $1.5 Billion of Bonds Maturing in 2021

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To contact the reporter on this story: Laura Benitez in London at lbenitez1@bloomberg.net

To contact the editors responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, Chris Vellacott

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