Here’s Why the Bank of Canada Is Worried About the Rise of Private Credit
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 [...]
TL;DR
- The Bank of Canada is observing the growth of private credit.
- Canadian investors and banks have exposure to $0.5 trillion in private credit loans.
- Private credit involves loans from non-bank entities like asset managers, insurers, and pension funds.
- Businesses use private credit for growth funding when unable to access traditional bank loans or bond markets.