The Bank of Canada is carefully watching the rise of an alternative credit model that has Canadian investors and banks exposed to half a trillion dollars of loans held largely beyond the public eye.
The concern revolves around private credit, which doesn’t have a universal definition but broadly involves businesses taking out loans from non-bank lenders including asset managers, insurers and pension funds.
A mid-sized business might turn to private credit if they’re looking for money to fund the next stage of growth but are still too small for a traditional bank loan or issuing debt on the bond market….