S&P Upgrades Fairfax Subs to AA-

[Parsad]

Congratulations to Prem and Fairfax!  Subs at AA- and Fairfax holding company at A-. 

 

Not far to go to get to AAA over the next few years...if not sooner!  Cheers!

 

 

SP - Fairfax upgrade.pdf

[dartmonkey]

Great news! Anyone have any estimate of how much this might lower the interest cost on their new corporate debt, going forward?

 

 

[netcash1]

Did Fairfax repurchase another 4000 shares May 30, 2025?  

[nwoodman]

8 minutes ago, dartmonkey said:

Great news! Anyone have any estimate of how much this might lower the interest cost on their new corporate debt, going forward?

 

 

Conservatively about 30 bps, maybe more depending on tenor and market conditions. The upgrade from BBB+ to A- at the holdco level is real money, probably 30–40 bps in spread tightening. The subs getting bumped from A+ to AA- trims another 15–25 bps. That adds up.

 

Assume ~$8B in debt and ~25% refinanced annually, you’re looking at $6–10 million in yearly interest savings. Not game-changing for a company earning over $4B, but it all helps. 

 

But the bigger point? They’re right where they want to be. AA- is the credit rating sweet spot, low enough cost of capital to stay competitive, high enough to keep regulators and counterparties happy, but not so high they’re handcuffed.

 

AAA sounds good in theory, but it’s a straitjacket in practice. More capital warehoused, less flexibility, and no room to be contrarian.  This upgrade is the best of both world’s.
 

It’s been a long time coming so +1 to @Parsad’s congratulations

[SafetyinNumbers]

2 hours ago, netcash1 said:

Did Fairfax repurchase another 4000 shares May 30, 2025?  

That’s when they cancelled them. They bought them a few weeks earlier. 

[modiva]

+1. Congratulations to the Fairfax team and the shareholders! 

[adventurer]

The "Rationale" could have been written by Viking. 

[dochood]

4 hours ago, adventurer said:

The "Rationale" could have been written by Viking. 

+1