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Debt obligations | 12 Months Ended
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Dec. 31, 2021
Debt obligations | NOTE 9—Debt obligations:
a. | Short-term debt:
|  |  |  |  |  |  |  | December 31, |
|  | Weighted average interest rate as of December 31, 2021 |  |  | Maturity |  |  | 2021 |  |  | 2020 |
|  |  |  |  |  |  |  | (U.S. $ in millions) |
Convertible debentures |  |  | 0.25 | % |  |  | 2026 |  |  |  | 23 |  |  |  | 514 |
Current maturities of long-term liabilities |  |  |  | 1,403 |  |  |  | 2,674 |
Total short term debt |  |  | $ | 1,426 |  |  | $ | 3,188 |
Convertible senior debentures The principal amount of Teva’s 0.25% convertible senior debentures due 2026 was $23 million as of December 31, 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 December 31, 2021 |  |  | Maturity |  |  | December 31, 2021 |  |  | December 31, 2020 |
|  | % |  |  |  |  |  | (U.S. $ in millions) |
Senior notes EUR 1,500 million (6) |  |  | 1.13 | % |  |  | 2024 |  |  |  | 708 |  |  |  | 1,839 |
Sustainability-linked senior notes EUR 1,500 million (2)(*) |  |  | 4.38 | % |  |  | 2030 |  |  |  | 1,699 |  |  |  | — |
Senior notes EUR 1,300 million (6) |  |  | 1.25 | % |  |  | 2023 |  |  |  | 670 |  |  |  | 1,595 |
Sustainability-linked senior notes EUR 1,100 million (3)(*) |  |  | 3.75 | % |  |  | 2027 |  |  |  | 1,246 |  |  |  | — |
Senior notes EUR 1,000 million |  |  | 6.00 | % |  |  | 2025 |  |  |  | 1,134 |  |  |  | 1,230 |
Senior notes EUR 900 million |  |  | 4.50 | % |  |  | 2025 |  |  |  | 1,020 |  |  |  | 1,107 |
Senior notes EUR 750 million |  |  | 1.63 | % |  |  | 2028 |  |  |  | 844 |  |  |  | 916 |
Senior notes EUR 700 million (6) |  |  | 3.25 | % |  |  | 2022 |  |  |  | 307 |  |  |  | 861 |
Senior notes EUR 700 million |  |  | 1.88 | % |  |  | 2027 |  |  |  | 792 |  |  |  | 860 |
Senior notes USD 3,500 million |  |  | 3.15 | % |  |  | 2026 |  |  |  | 3,496 |  |  |  | 3,495 |
Senior notes USD 3,000 million (6) |  |  | 2.80 | % |  |  | 2023 |  |  |  | 1,453 |  |  |  | 2,996 |
Senior notes USD 2,000 million |  |  | 4.10 | % |  |  | 2046 |  |  |  | 1,986 |  |  |  | 1,986 |
Senior notes USD 1,475 million (1) |  |  | 2.20 | % |  |  | 2021 |  |  |  | — |  |  |  | 1,472 |
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 |
Sustainability-linked senior notes USD 1,000 million (4)(*) |  |  | 4.75 | % |  |  | 2027 |  |  |  | 1,000 |  |  |  | — |
Sustainability-linked senior notes USD 1,000 million (5)(*) |  |  | 5.13 | % |  |  | 2029 |  |  |  | 1,000 |  |  |  | — |
Senior notes USD 844 million (6) |  |  | 2.95 | % |  |  | 2022 |  |  |  | 715 |  |  |  | 853 |
Senior notes USD 789 million |  |  | 6.15 | % |  |  | 2036 |  |  |  | 783 |  |  |  | 783 |
|  | Weighted average interest rate as of December 31, 2021 |  |  | Maturity |  |  | December 31, 2021 |  |  | December 31, 2020 |
|  | % |  |  |  |  |  | (U.S. $ in millions) |
Senior notes USD 613 million (7) |  |  | 3.65 | % |  |  | 2021 |  |  |  | — |  |  |  | 616 |
Senior notes USD 588 million (7) |  |  | 3.65 | % |  |  | 2021 |  |  |  | — |  |  |  | 586 |
Senior notes CHF 350 million |  |  | 0.50 | % |  |  | 2022 |  |  |  | 382 |  |  |  | 397 |
Senior notes CHF 350 million |  |  | 1.00 | % |  |  | 2025 |  |  |  | 383 |  |  |  | 398 |
Total senior notes |  |  |  |  |  |  |  |  |  |  | 23,118 |  |  |  | 25,490 |
Other long-term debt |  |  |  |  |  |  |  |  |  |  | 2 |  |  |  | 1 |
Less current maturities |  |  |  |  |  |  |  |  |  |  | (1,403 | ) |  |  | (2,674 | )
Less debt issuance costs |  |  |  |  |  |  |  |  |  |  | (100 | ) |  |  | (86 | )
Total senior notes and loans |  |  |  |  |  |  |  |  |  | $ | 21,617 |  |  | $ | 22,731 |
(1) | In July 2021, Teva repaid $1,475 million of its 2.2% senior notes at maturity.
(2) | In November 2021, Teva issued sustainability-linked senior notes in an aggregate principal amount of 1,500 million euro bearing 4.38% annual interest and due May 2030. If Teva fails to achieve certain sustainability performance targets, the interest rate shall increase by 0.125%-0.375% per annum, from and including May 9, 2026.
(3) | In November 2021, Teva issued sustainability-linked senior notes in an aggregate principal amount of 1,100 million euro bearing 3.75% annual interest and due May 2027. If Teva fails to achieve certain sustainability performance targets, a one-time premium payment of 0.15%-0.45% out of the principal amount will be paid at maturity or upon earlier redemption, if such redemption is on or after May 9, 2026.
(4) | In November 2021, Teva issued sustainability-linked senior notes in an aggregate principal amount of $1,000 million bearing 4.75% annual interest and due May 2027. If Teva fails to achieve certain sustainability performance targets, a one-time premium payment of 0.15%-0.45% out of the principal amount will be paid at maturity or upon earlier redemption, if such redemption is on or after May 9, 2026.
(5) | In November 2021, Teva issued sustainability-linked senior notes in an aggregate principal amount of $1,000 million bearing 5.13% annual interest and due May 2029. If Teva fails to achieve certain sustainability performance targets, the interest rate shall increase by 0.125%-0.375% per annum, from and including May 9, 2026.
(6) | In November 2021, Teva consummated a cash tender offer and extinguished 873 million euro aggregate principal amount of its 1,500 million euro 1.13% senior notes due in October 2024; 708 million euro aggregate principal amount of its 1,300 million euro 1.25% senior notes due in March 2023; 428 million euro aggregate principal amount of its 700 million euro 3.25% senior notes due in April 2022; $1,546 million aggregate principal amount of its $3,000 million 2.8% senior notes due in July 2023; and $132 million aggregate principal amount of its $1,300 million 2.95% senior notes due in December 2022.
(7) | In November 2021, Teva repaid $613 million and $588 million of its 3.65% senior notes at maturity.
(8) | Debt issuance costs as of December 31, 2021 include $40 million in connection with the issuance of the sustainability-linked senior notes in November 2021.
* | Interest rate adjustments and a potential one-time premium payment related to the sustainability-linked bonds are treated as bifurcated embedded derivatives. See note 10c.
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 payment of all principal, interest, discount and additional amounts (as defined), if any. The long-term debt outlined in the above table is generally redeemable at any time at varying redemption prices plus accrued and unpaid interest. Long term debt as of December 31, 2021 is effectively denominated in the following currencies: U.S. dollar 61%, euro 37% and Swiss franc 2%. 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, which will be reduced to $2.2 billion in April 2022 (“RCF”). The RCF agreement provides for two separate tranches, a $1.15 billion tranche A and a $1.15 billion tranche B. Tranche A had 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 was 5.00x through the fourth quarter of 2021, gradually declines to 4.50x in the first and second quarters of 2022, 4.00x in the third and fourth quarters of 2022, and will decline to 3.50x in the first quarter of 2023. The RCF can be used for general corporate purposes, including repaying existing debt. As of December 31, 2021 and as of the date of this Annual Report on Form 10-K, no amounts were outstanding under the RCF. 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 and sustainability-linked senior notes is outstanding, could lead to an event of default under the Company’s senior notes and sustainability-linked senior notes , due to cross acceleration provisions. 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. Due to the fact that Teva’s cash flow generation and EBITDA vary between quarters, there is a possibility that Teva will not be compliant with its financial covenants during a specific period and could temporarily be unable to draw upon the RCF. If this were to occur, Teva expects to 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 without drawing upon the RCF. Teva continually evaluates its expected compliance with the covenants described above, and intends, if needed, to proactively renegotiate and amend such covenants. As of December 31, 2021, the required annual principal payments of long-term debt (excluding debt discount and issuance costs and fair value hedge adjustments), including convertible senior debentures, starting from the year 2023, are as follows:
|  | December 31, 2021 |
|  | (U.S. $ in millions) |
2023 |  | $ | 2,124 |
2024 |  |  | 1,960 |
2025 |  |  | 3,535 |
2026 * |  |  | 3,523 |
2027 and thereafter |  |  | 10,626 |
|  | $ | 21,768 |
* | including $23 million convertible notes. See note 9a.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (h) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(c)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (g) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1E -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (i) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 + Details
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