Teva Gets Funding to Close Allergan Deal With Franc Bond Sale

Teva Pharmaceutical Industries Ltd. sold Swiss-franc denominated bonds and said it had raised enough money in a sweep of markets worldwide to close a $40.5 billion acquisition.

The Israeli drugmaker issued 1 billion francs ($1 billion) of bonds in a three-part offering, according to data compiled by Bloomberg. It has also sold dollar- and euro-denominated notes this week to help its purchase of Allergan Plc’s generic-drug business.

Teva accelerated a roughly $20 billion fundraising program to take advantage of borrowing costs pushed to record lows by European Central Bank stimulus. It tapped demand for corporate debt as negative yields on growing amounts of sovereign bonds prompt investors to venture into other markets. 

“It ticks a lot of boxes in terms of name comfort, yield and technicals,” said Philipp Buff, a Geneva-based senior credit analyst at Pictet Asset Management, with about 149 billion francs under management. “There is currently strong demand for primary issues.”

The Petach Tikva, Israel-based company sold 350 million francs of nine-year bonds that will yield 135 basis points more than benchmarks, after initially marketing the securities at 140 basis points, according to data compiled by Bloomberg. 

It also sold the same amount of six-year notes with a premium of 105 basis points after first offering 110 basis points and 300 million francs of two-year notes at about 86.3 basis points over benchmarks, also tighter than initially offered.

Teva has all the financing required to close the acquisition, it said in emailed comments. The company moved the sale forward from later in the year to seize upon “very attractive terms” in the bond market, Chief Executive Officer Erez Vigodman told investors last week.

The fundraising is the third-biggest corporate-bond deal this year, based on data compiled by Bloomberg. Anheuser-Busch InBev NV raised $61 billion in a multi-currency deal in January and March, while Dell Inc. sold $23 billion of bonds in May and June.

Teva has a BBB rating from S&P Global Ratings, the second-lowest investment grade, and Baa1 at Moody’s Investors Service, three levels above junk.

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