The issuance of US$200 million in senior notes by Fairfax Financial subsidiary Crum & Forster Holdings Corp. should help the parent improve its liquidity. Rating agency A.M. Best has placed a “bb+” senior unsecured debt rating on the notes, which mature in 2013. Assessing the offering, Best says that along with an IPO on Fairfax’s Canadian subsidiaries (under the name Northbridge) this should bring Fairfax to its targeted goal of Cdn$500 million in cash and marketable securities. The liquidity issue is one Fairfax faces as it negotiates a new bank credit facility, Best explains. “The issuance of this debt is noteworthy as it affirms Fairfax Financial’s ability to access public capital markets, a source of capital A.M. Best had believed unavailable,” states a release from the rating agency. However, A.M. Best maintains its negative outlook on the debt ratings of Fairfax and its subsidiaries (including Crum & Forster), “as additional time is needed to comfortably prove sustainable good earnings and reserve adequacy”. Upon completion of the issue, the funds will be held in escrow until Fairfax renegotiates its bank credit facility. If and when this is done, Crum & Forster will maintain partial proceeds to cover interest expense on the issuance for the next two years, while A.M. Best expects the remaining funds to go to Fairfax. In other Fairfax news, the company’s reinsurance operation, Odyssey Re, has declared a quarterly dividend of $0.025 per common share payable on June 30.