S&P Global Ratings placed its ratings on Teva Pharmaceutical Industries Ltd., including the BBB- corporate credit rating, on CreditWatch with negative implications.
The CreditWatch placement comes after Teva amended the covenants on its term loans, raising leverage limits to 5.9x at the end of 2018 and 5x at the end of 2019, up from 5x and 4.5x, respectively, making it the second time Teva amended its covenants in the past five months.
Moreover, Momenta Pharmaceuticals Inc. plans to launch a generic competitor to Teva's multiple sclerosis drug Copaxone in the first half of 2018 — the second generic competitor following Mylan NV.
S&P said that based on these factors, it sees a significant risk that it will revise its 2018 and 2019 forecasts lower and that the repeated downward revisions over the past 18 months are indicative of a business that is less stable and predictable than previously believed.
The rating takes into account the agency's view that Teva's scale as the largest generic pharmaceutical manufacturer may be eroding as customers consolidate and competition increases.
S&P expects to resolve the CreditWatch placement after Teva's fourth-quarter earnings call, where it expects the company to provide details on expectations for Copaxone and the U.S. generics segment.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.
