Teva sets final tranches and yields on $5B cross-border bond raise

Teva Pharmaceutical Industries Ltd. is out with final yields and tranching on its upsized roughly $5 billion-equivalent offering of unsecured sustainability-linked bonds ahead of final pricing later today.

This leaves the deal split as follows:

* €1.1 billion of 5.5-year notes due May 9, 2027, at a final yield of 3.75%, from final guidance of 3.75%-3.875%;
* €1.5 billion of 8.5-year notes due May 9, 2030, at 4.375%, from 4.375%-4.50%;
* $1 billion of 5.5-year notes due May 9, 2027, at 4.75%, from 4.75%-4.875%;
* $1 billion of 7.5-year notes due May 9, 2029, at 5.125%, from 5.125%-5.250%.

The update comes after final guidance earlier today, which followed previous guidance in the 4% area and 4.625% area on the euro 5.5-year and 8.5-year notes, respectively, and at 5% area and 5.375% area on the dollar 5.5-year and 7.5-year tenors.

The deal was initially guided in a roughly $4 billion-equivalent area, and proceeds were initially earmarked to refinance debt and fund a $3.5 billion tender offer for debt maturing 2022-2024. Teva expects that substantially all of the upsize will refinance existing maturities.

Initial price talks were in the low 4% range and high 4% range on the 5.5-year and 8.5-year euro notes, respectively. IPTs on the dollars were given in a very high 4% range on the 5.5-year notes, with an additional 37.5 basis points on 7.5-year dollar bonds.

BNP Paribas, BofA Securities, HSBC and J.P. Morgan are bookrunners.

Ratings are out at BB-/Ba2. Teva is an Israeli multinational pharmaceutical company with shares listed in New York and Tel Aviv.

The deal comes amid a historic ruling by a California court that found Teva and other pharmaceutical groups not liable for claims worth $50 billion brought by several counties relating to the U.S. opioid epidemic.

The bonds will feature two sustainability key performance indicators, with the first linked to medicines and the second to greenhouse gas reductions. Under the first key performance indicator, the company will make regulatory submissions across six key therapeutic areas and increase access to medicine programs.

On the 5.5-year notes, a 12.5-basis-point coupon step-up will apply at maturity per sustainability performance target not met. The step-ups are capped at 45 bps. On the longer euro and dollar notes, a 12.5 bps coupon step-up per sustainability performance target missed and per annum will apply from November 2026 until maturity, set at a maximum of 37.5 basis points.

Teva Pharmaceutical Finance Netherlands II BV is the issuing entity for the euro notes, while Teva Pharmaceutical Finance Netherlands III BV is the issuer of the dollar bonds.