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Debt obligations
 9 Months Ended
Sep. 30, 2021
Debt obligations
NOTE 7 – Debt obligations:
a. Short-term debt:    
 
 
 
 
 
 
 
 
 
September 30
,
 
 
December 31,
 
 
    
Weighted average interest
rate as of September 30, 2021
    
Maturity
     
2021
     
2020
  
                            
                 
(U.S. $ in millions)
  
Convertible senior debentures
      0.25 %      2026        23        514  
Revolving Credit Facility(1)
      LIBOR+1.75 %               300        —    
Current maturities of long-term liabilities
                       2,386        2,674  
                     
 
 
     
 
 
  
Total short-term debt
                     $ 2,709      $ 3,188  
                     
 
 
     
 
 
  
 
(1)
As of the date of this Quarterly Report on Form 10-Q, no amounts were outstanding under the RCF.
Convertible senior debentures
The principal amount of T
e
va’s 0.25% convertible senior debentures due 2026 was $23 million as of September 30, 2021 and $514 million as of December 31, 2020. These convertible senior debentures include a “net share settlement” feature according to which the principal amount will be paid in cash and in case of conversion, only the residual conversion value above the principal amount will be paid in Teva shares. Due to the “net share settlement” feature, exercisable at any time, these convertible senior debentures are classified in the Balance Sheet under short-term debt. Holders of the convertible senior debentures exercised their optional repurchase right and redeemed $491 million of the convertible senior debentures on February 1, 2021, which was the date to exercise this right.
b. Long-term debt:
 
    
Weighted average interest
rate as of September 30, 2021
    
Maturity
    
September 30,
2021
    
December 31,
2020
  
                          
                
(U.S. $ in millions)
  
Senior notes EUR 1,500 million
      1.13 %      2024       1,735       1,839  
Senior notes EUR 1,300 million
      1.25 %      2023       1,505       1,595  
Senior notes EUR 1,000 million
      6.00 %      2025       1,160       1,230  
Senior notes EUR 900 million
      4.50 %      2025       1,044       1,107  
Senior notes EUR 750 million
      1.63 %      2028       864       916  
Senior notes EUR 700 million
      3.25 %      2022       812       861  
Senior notes EUR 700 million
      1.88 %      2027       810       860  
Senior notes USD 3,500 million
      3.15 %      2026       3,495       3,495  
Senior notes USD 1,475 million (1)
      2.20 %      2021       —         1,472  
Senior notes USD 3,000 million
      2.80 %      2023       2,997       2,996  
Senior notes USD 2,000 million
      4.10 %      2046       1,986       1,986  
Senior notes USD 1,250 million
      6.00 %      2024       1,250       1,250  
Senior notes USD 1,250 million
      6.75 %      2028       1,250       1,250  
Senior notes USD 1,000 million
      7.13 %      2025       1,000       1,000  
Senior notes USD 844 million
  
 
2.95
% 
 
 
2022
 
  
 
851
 
  
 
853
 
Senior notes USD 789 million
  
 
6.15
% 
 
 
2036
 
  
 
783
 
  
 
783
 
Senior notes USD 613 million
  
 
3.65
% 
 
 
2021
 
  
 
614
 
  
 
616
 
Senior notes USD 588 million
  
 
3.65
% 
 
 
2021
 
  
 
586
 
  
 
586
 
Senior notes CHF 350 million
  
 
0.50
% 
 
 
2022
 
  
 
374
 
  
 
397
 
Senior notes CHF 350 million
  
 
1.00
% 
 
 
2025
 
  
 
375
 
  
 
398
 
 
  
      
 
      
  
 
 
 
  
 
 
 
Total senior notes
  
      
 
      
  
 
23,491
 
  
 
25,490
 
Other long-term debt
  
 
1.23
% 
 
 
2026
 
  
 
2
 
  
 
1
 
Less current maturities
  
      
 
      
  
 
(2,386
) 
  
 
(2,674
) 
Less debt issuance costs
  
      
 
      
  
 
(69
) 
  
 
(86
) 
 
  
      
 
      
  
 
 
 
  
 
 
 
Total senior notes and loans
  
      
 
      
  
$
21,037
 
  
$
22,731
 
 
  
      
 
      
  
 
 
 
  
 
 
 
 
(1)
In July 2021, Teva repaid $1,475 million of its 2.2% senior notes at maturity.
Long-term debt was issued by several indirect wholly-owned subsidiaries of the Company and is fully and unconditionally guaranteed by the Company as to p
a
yment of all principal, interest, discount and additional amounts, if any.
Long-term debt as of September 30, 2021 is effectively denominated in the following currencies: 64% in U.S. dollar, 34% in euro and 2% in Swiss franc.
Teva’s principal sources of short-term liquidity are its cash on hand, existing cash investments, liquid securities and available credit facilities, primarily its $2.3 billion unsecured syndicated revolving credit facility entered into in April 2019 (“RCF”).
The RCF agreement provides for two separate tranches, a $1.15 billion tranche A and a $1.15 billion tranche B. Tranche A h
a
d a maturity date of April 8, 2022, of which an amount of $1.065 billion was extended twice, initially to April 8, 2023 and then to April 8, 2024. Tranche B has a maturity date of April 8, 2024. Loans and letters of credit will be available from time to time under each tranche for Teva’s general corporate purposes.
The RCF contains certain covenants, including certain limitations on incurring liens and indebtedness and maintenance of certain financial ratios, including the requirement to maintain compliance with a net debt to EBITDA ratio, which becomes more restrictive over time. The net debt to EBITDA ratio limit is 5.00x in the third and fourth quarters of 2021, gradually declines to 4.50x in the first and second quarters of 2022, and continues to gradually decline over the remaining term of the RCF to 3.50x in the first quarter of 2023.
The RCF can be used for general corporate purposes, including repaying existing debt. As of September 30, 2021
, $300 million was outstanding under the RCF. As
 
of the date of this Quarterly Report on Form
10-Q,
no amounts were
outstanding under the RCF.
 
Based on current and forecasted results, the Company expects that it will not exceed the financial covenant thresholds set forth in the RCF within one year from the date these financial statements are issued. 
Under specified circumstances, including
non-compliance
with any of the covenants described above and the unavailability of any waiver, amendment or other modification thereto, the Company will not be able to borrow under the RCF. Additionally, violations of the covenants, under the above-mentioned circumstances, would result in an event of default in all borrowings under the RCF and, when greater than a specified threshold amount as set forth in each series of senior notes is outstanding, could lead to an event of default under the Company’s senior notes due to cross acceleration provisions.
Teva expects that it will continue to have sufficient cash resources to support its debt service payments and all other financial obligations within one year from the date that these financial statements are issued.