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Debt obligations
 12 Months Ended
Dec. 31, 2022
Debt obligations
NOTE 9—Debt obligations:
 
a.
Short-term debt:
 
                
December 31,
  
    
Weighted average

interest rate as of
December 31, 2022
    
Maturity
    
2022
    
2021
  
                          
                
(U.S. $ in millions)
  
Convertible debentures
      0.25 %      2026       23       23  
Current maturities of long-term liabilities
                      2,086       1,403  
                    
 
 
    
 
 
  
Total short term debt
                    $ 2,109     $ 1,426  
                    
 
 
    
 
 
  
Convertible senior debentures
The principal amount of Teva’s 0.25% convertible senior debentures due 2026 was $23 
million as of December 31, 2022 and December 31, 2021. 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.
b.
Long-term debt:
 
 
 
Weighted average
interest rate as of
December 31,
2022
 
 
Maturity
 
 
December 31,
2022
 
 
December 31,
2021
 
 
 
%
 
 
 
 
 
(U.S. $ in millions)
 
Senior notes EUR 1,500 million
      1.13 %      2024        670        708  
Sustainability-linked senior notes EUR 1,500 million (1)(*)
      4.38 %      2030        1,606        1,699  
Senior notes EUR
 
1,300 million
      1.25 %      2023        633        670  
Sustainability-linked senior notes EUR 1,100 million (2)(*)
      3.75 %      2027        1,177        1,246  
Senior notes EUR 1,000 million
      6.00 %      2025        1,070        1,134  
Senior notes EUR 900 million
      4.50 %      2025        963        1,020  
Senior notes EUR
 
750 million
      1.63 %      2028        800        844  
Senior notes EUR 700 million (3)
      3.25 %      2022        —          307  
Senior notes EUR 700 million
      1.88 %      2027        748        792  
Senior notes USD 3,500 million
      3.15 %      2026        3,496        3,496  
Senior notes USD 3,000 million
      2.80 %      2023        1,453        1,453  
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  
Sustainability-linked senior notes USD 1,000 million (2)(*)
      4.75 %      2027        1,000        1,000  
Sustainability-linked senior notes USD 1,000 million (1)(*)
      5.13 %      2029        1,000        1,000  
Senior notes USD 844 million (5)
      2.95 %      2022        —          715  
Senior notes USD 789 million
      6.15 %      2036        783        783  
Senior notes CHF 350 million (4)
      0.50 %      2022        —          382  
 
 
 
Weighted average
interest rate as of
December 31,
2022
 
 
Maturity
 
 
December 31,
2022
 
 
December 31,
2021
 
 
 
%
 
 
 
 
 
(U.S. $ in millions)
 
Senior notes CHF 350 million
      1.00 %      2025        382        383  
                     
 
 
     
 
 
  
Total senior notes
        21,266        23,118  
Other long-term debt
        1        2  
Less current maturities
        (2,086 )       (1,403 ) 
Less debt issuance costs
        (78 )       (100 ) 
      
 
 
     
 
 
  
Total senior notes and loans
      $ 19,103      $ 21,617  
      
 
 
     
 
 
  
 
(1)
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.
(2)
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.
(3)
In April 2022, Teva repaid $296 million of its 3.25% senior notes at maturity.
(4)
In July 2022, Teva repaid $365 million of its 0.50% senior notes at maturity.
(5)
In December 2022, Teva repaid $713 million of its 2.95% senior notes at maturity.
(*)
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, 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.
Teva’s debt as of December 31, 2022 was effectively denominated in the following currencies: U.S. dollar
62
%, euro
36
% 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 $1.8 
billion
unsecured syndicated sustainability-linked revolving credit facility entered into in April 2022, which was amended in February 2023 (“RCF”).

The RCF has a maturity date of
 
April
2026
, with two
one-year
extension options. The RCF contains certain covenants, including certain limitations on incurring liens and indebtedness and maintenance of certain financial ratios, including a maximum leverage ratio, which becomes more restrictive over time. In addition, the RCF is linked to two sustainability performance targets: (i) the Company’s S&P ESG Score and (ii) number of new regulatory submissions in low and middle-income countries. The RCF margin may increase or decrease depending on the Company’s sustainability performance.
On February 6, 2023, the terms of the RCF were amended to update the Company’s maximum leverage ratio under the RCF for certain periods. Under the terms of the RCF, as amended, the Company’s leverage ratio shall not exceed 4.25x in the fourth quarter of 2022, 4.25x in the first, second and third quarters of 2023, 4.00x in the fourth quarter of 2023, 4.00x in the first, second and third quarters of 2024, and 3.50x
in the fourth quarter of 2024 and onwards.
The RCF can be used for general corporate purposes, including repaying existing debt. As of December 31, 2022 and as of the date of this Annual Report on Form
10-K,
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 the 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 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.
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.
As of December 31, 2022, 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 2024, are as follows:
 
    
December 31,
2022
  
    
(U.S. $ in millions)
  
2024
    $ 1,921  
2025
      3,412  
2026 *
      3,523  
2027
      2,927  
2028 and thereafter
      7,448  
    
 
 
  
     $ 19,231  
    
 
 
  
 
*
I
ncluding $23 million convertible notes. See note 9a.