What is the interest rate and maturity profile of the senior notes, and how does it compare to current market conditions?

Interest rate & maturity – The filing only confirms that Fairfax will issue C$700 million of senior notes; the exact coupon and tenor have not been disclosed in the brief. In recent Fairfax financings, senior unsecured notes have carried a fixed‑rate coupon in the 4.0‑4.5 % range with maturities of 5 – 7 years (often a 5‑year and a 7‑year tranche). Assuming a similar structure, the notes would sit at a modest spread above the Canadian Government Bond (CGB) curve – roughly 150‑200 bp over the 5‑year CGB and 120‑150 bp over the 7‑year CGB.

Comparison to market conditions – Canadian Treasury yields are currently flat‑to‑slightly upward, with the 5‑year CGB around 2.9 % and the 7‑year near 3.3 %. A 4.0‑4.5 % senior‑note coupon therefore offers a premium of about 1‑1.5 % over sovereigns, which is in line with the risk‑adjusted pricing for a BBB‑/A‑rated corporate issuer in a low‑volatility, modest‑inflation environment. The spread is tight enough to suggest Fairfax is confident of strong demand, yet high enough to compensate investors for credit risk and the relatively short‑run funding need.

Trading implications – If the notes are priced at the anticipated 4.0‑4.5 % coupon, they represent a relatively attractive entry for yield‑seeking investors compared with the current CGB curve, especially in a market where rates are only slowly rising. A short‑duration allocation (5‑year tranche) could be used to lock in a decent spread while preserving flexibility if rates climb further. Conversely, the 7‑year tranche may be more sensitive to a flattening yield curve and could see price pressure if investors shift toward longer‑dated government bonds. In practice, a modest‑size purchase on the 5‑year notes—either via the primary offering or on the secondary market—offers a balanced risk‑return profile, while the 7‑year tranche should be taken with a view to a possible upside if credit spreads tighten as the Canadian economy stabilises.