Bloomberg

(Bloomberg) -- Teva Pharmaceutical Industries Ltd. is marketing Swiss-franc denominated bonds as the drugmaker sweeps markets worldwide in search of finance for a $40.5 billion acquisition.

The Israeli company is selling 1 billion francs ($1 billion) in a three-part offering, it said. It has already sold dollar- and euro-denominated notes to help its purchase of Allergan Plc’s generic-drug business.

Teva has accelerated a roughly $20 billion fundraising program to take advantage of borrowing costs pushed to record lows by European Central Bank stimulus. It’s also tapping 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. “Indicative pricing on the three parts of the deal suggest they will price with a positive yield, when a lot of corporate debt in the space is negative yielding, so there will be strong demand.”

The Petach Tikva, Israel-based company is initially offering 350 million francs of nine-year bonds that will yield about 140 basis points more than benchmark rates, according to a person familiar with the matter who asked not to be identified because they’re not authorized to speak publicly. It’s also selling the same amount of six-year notes with a premium of about 110 basis points and 300 million francs of two-year notes at about 89.5 basis points over benchmarks.

Teva sold $15 billion of bonds as well as 4 billion euros ($4.4 billion) of notes this week to help fund its acquisition. It 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 would be 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.

To contact the reporters on this story: Sally Bakewell in London at sbakewell1@bloomberg.net, Karl Lester M. Yap in London at kyap5@bloomberg.net. To contact the editors responsible for this story: Shelley Smith at ssmith118@bloomberg.net, Mark McCord, Neil Denslow

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