Alekbaylee Posted May 4, 2011 Posted May 4, 2011 http://finance.yahoo.com/news/Fairfax-Announces-Cash-Tender-iw-2881223077.html?x=0&.v=1
StubbleJumper Posted May 4, 2011 Posted May 4, 2011 Ok, fine. Just as long as they don't turn around with a $500m note offering or a $500m preferred offering two or three months down the road... They are very active on capital management, sometimes with seemingly offsetting measures in the same year. It's always struck me as being a little trigger-happy. SJ
Alekbaylee Posted May 4, 2011 Author Posted May 4, 2011 It's sort of a swap. They're pushing back debt maturities again. Probably have something in mind (another big acquisition?) http://finance.yahoo.com/news/Fairfax-Announces-Private-iw-1940079786.html?x=0&.v=1
StubbleJumper Posted May 4, 2011 Posted May 4, 2011 The notes that they floated last year were 7.25%. The re-purchases will not offer any meaningful interest savings once you take into account the re-purchase premium, and the offering costs for the new notes. IMO, the $180m that's due next year is not very burdensome, just pay it off...and there's no real rush to re-finance debt that's not due until 2015 or 2017. At least it's better than the years when they re-purchased common shares and then had a common share issuance in the same year. I think you might be right about Prem getting positioned for yet another acquisition. That's about the only explanation that makes sense. SJ
bluedevil Posted May 4, 2011 Posted May 4, 2011 I think this is just a straight-up refinancing. They could pay off their debt coming due next year, but I don't think they want to. It seems Fairfax pretty consciously targets a net debt / net total capital in the low 10s.
Uccmal Posted May 4, 2011 Posted May 4, 2011 Ever since the emergency refinance days they have kept those maturities way out. The short term cost of issuance of the new notes and bringing in the old notes will seem insignificant when they loan out money to the likes of H&R Reit at extortion rates sometime in the future, or have the capital available to deploy in a severe hard market, when others cant borrow a shoelace.
bluedevil Posted May 4, 2011 Posted May 4, 2011 Here is the pricing on the issue. The 5.75% coupon is about 200 basis points lower than the debt that is being taken out. ---------------------------------------------- NEW YORK (Dow Jones)--Fairfax Financial Holdings Ltd. (FRFHF, FFH.T) sold Wednesday a new 10-year offering in the private-placement Rule 144a market. The $500 million issue was sold via sole bookrunner Bank of America Merrill Lynch. The deal was priced with a 5.75% coupon at a price of 99.646 to yield 5.847% and offered a risk premium of 262.5 basis points over Treasurys. That spread was in line with the issue's launch level, and narrower than earlier 275 basis point area preliminary pricing guidance had suggested. The lower risk premium underscored good demand for the issue. Proceeds will be used for general corporate purposes, which could include the repayment of outstanding debt securities. The deal has been rated Baa3 by Moody's Investors Service and BBB- by Standard & Poor's. -By Kellie Geressy-Nilsen, Dow Jones Newswires; 212-416-2225; [email protected]
Smazz Posted May 5, 2011 Posted May 5, 2011 Not to mention they want to replenish their cash balance from the hit on the Q1
StubbleJumper Posted May 5, 2011 Posted May 5, 2011 Here is the pricing on the issue. The 5.75% coupon is about 200 basis points lower than the debt that is being taken out. ---------------------------------------------- NEW YORK (Dow Jones)--Fairfax Financial Holdings Ltd. (FRFHF, FFH.T) sold Wednesday a new 10-year offering in the private-placement Rule 144a market. The $500 million issue was sold via sole bookrunner Bank of America Merrill Lynch. The deal was priced with a 5.75% coupon at a price of 99.646 to yield 5.847% and offered a risk premium of 262.5 basis points over Treasurys. That spread was in line with the issue's launch level, and narrower than earlier 275 basis point area preliminary pricing guidance had suggested. The lower risk premium underscored good demand for the issue. Proceeds will be used for general corporate purposes, which could include the repayment of outstanding debt securities. The deal has been rated Baa3 by Moody's Investors Service and BBB- by Standard & Poor's. -By Kellie Geressy-Nilsen, Dow Jones Newswires; 212-416-2225; [email protected] Wow, 5.75% is a smoking good rate!
Mikenhe Posted May 5, 2011 Posted May 5, 2011 Here is the pricing on the issue. The 5.75% coupon is about 200 basis points lower than the debt that is being taken out. ---------------------------------------------- NEW YORK (Dow Jones)--Fairfax Financial Holdings Ltd. (FRFHF, FFH.T) sold Wednesday a new 10-year offering in the private-placement Rule 144a market. The $500 million issue was sold via sole bookrunner Bank of America Merrill Lynch. The deal was priced with a 5.75% coupon at a price of 99.646 to yield 5.847% and offered a risk premium of 262.5 basis points over Treasurys. That spread was in line with the issue's launch level, and narrower than earlier 275 basis point area preliminary pricing guidance had suggested. The lower risk premium underscored good demand for the issue. Proceeds will be used for general corporate purposes, which could include the repayment of outstanding debt securities. The deal has been rated Baa3 by Moody's Investors Service and BBB- by Standard & Poor's.-By Kellie Geressy-Nilsen, Dow Jones Newswires; 212-416-2225; [email protected] Wow, 5.75% is a smoking good rate! yeah - and yet I still have to laugh at moodys and S&P's ratings...
tyska Posted May 5, 2011 Posted May 5, 2011 5.75% for ten years may be costing them less than their float is lately. :-\ With their investment prowess I'm not sure I'd be upset with them borrowing more at that rate, and handing it over to the investment team.
StubbleJumper Posted May 20, 2011 Posted May 20, 2011 And now they're offering another $400m at 6.40%? How would you like to be the guy who just bought the last batch at a yield of 5.847% only two weeks ago? SJ
Grenville Posted May 20, 2011 Posted May 20, 2011 And now they're offering another $400m at 6.40%? How would you like to be the guy who just bought the last batch at a yield of 5.847% only two weeks ago? SJ Could it just mean they need a higher coupon to get the other bond holders to tender their debt? Any thoughts on the fact that they are moving the debt to the holding company level instead of at the subs?
Uccmal Posted May 23, 2011 Posted May 23, 2011 Any thoughts on the fact that they are moving the debt to the holding company level instead of at the subs? Frees the subs up to write more business when the time is right.
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