Teva Pharmaceuticals Industries Ltd.’s credit rating was downgraded two notches into junk status at Moody’s Investors Service, which cited concerns over the drug maker’s sizable debt. The rating agency cut Teva’s senior unsecured rating to Ba2 from Baa3, which is the lowest investment grade rating, and assigned a Ba2 corporate family rating. The outlook is stable. “The downgrade of Teva’s ratings to speculative grade reflects the challenge of managing its significant debt burden while facing a prolonged period of earnings erosion,” said Morris Borenstein, an assistant vice president at Moody’s. “While Teva’s cost restructuring program will help to partially offset declines, execution risk is high.” Teva’s credit is also rated junk at Fitch Ratings, but S&P Global Ratings rates it BBB-, which is its lowest investment grade rating. The stock, which rose 2.2% in afternoon trade, has tumbled 34.5% over the past 12 months, while the SPDR S&P Pharmaceuticals ETF has gained 15.7% and the S&P 500 has climbed 22.7%.
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