Key Takeaways
- • A live poll at Institutional Investor's Toronto private credit forum found 57 percent of Canadian allocators plan to hold their private credit allocations steady over the next 12 months, with no significant increases planned.
- • Only 5 percent of respondents plan to increase Canadian private credit allocations, while 63 percent named the U.S. as the most attractive region for their next commitment, versus 8 percent for Canada.
- • 43 percent view the domestic opportunity set as too small or bank-dominated, and 29 percent will not consider domestic private credit at all.
- • Spread compression is the top concern, cited by 30 percent of respondents, with 70 percent saying recent headlines have not affected their commitment pace.
- • Infrastructure debt leads intended additions at 31 percent, followed by private investment-grade credit at 25 percent and asset-based finance at 19 percent.
Summary
Canadian institutional allocators appear committed to private credit but show signs that their appetite has plateaued. According to a live poll conducted at Institutional Investor's private credit forum in Toronto, 57 percent of respondents plan to keep their private credit allocations unchanged over the next 12 months. Private credit currently accounts for 44 percent of allocators' portfolios, yet only 38 percent expect to increase modestly, and none anticipate significant increases. Large Canadian public pension managers with over C$150 billion in assets made up half of respondents.
Sentiment toward the domestic opportunity set is cautious. Twenty-four percent of attendees described the Canadian private credit market as attractive but capacity-constrained, while 43 percent said it is too small or bank-dominated to deploy meaningful capital. Twenty-nine percent will not consider domestic private credit for their programs, and only 5 percent are looking to expand Canadian exposure. Allocators also show little home bias: 63 percent identified the U.S. as the most attractive region for their next private credit commitment, compared with 8 percent for Canada.
Keith Ambachtsheer, founder of KPA Advisory and director emeritus of the Toronto-based International Centre for Pension Management, attributed the restraint to transparency and liquidity issues in private credit, which he said create logical demand limitations. He noted these issues are unique to the asset class rather than specific to the region. Spread compression is the leading concern, cited by 30 percent of respondents who said there is too much capital chasing deals. Software and technology borrowers exposed to AI disruption, and valuation lag and marketing practices, each drew 17 percent.
When asked where they would most likely add capital over the next year, 31 percent named infrastructure debt, followed by private investment-grade credit at 25 percent and asset-based finance at 19 percent. Economic policy uncertainty does not appear to be the driver of caution: 70 percent said recent headlines have not affected their pace of commitments, though the remainder reported slower but continuing commitments.
The Canadian findings contrast with global momentum. The Alternative Investment Management Association reports double-digit growth in private credit assets under management among its members, and its deputy CEO and global head of government affairs, Jiri Krol, said the growth reflects private credit's expanding role in financing real estate, infrastructure, and asset-based lending. AIMA plans to issue its own report in October. The poll results also come as the Canadian government pushes institutional capital into domestic infrastructure, including a C$50 billion domestic infrastructure fund from CPP Investments and Brookfield Asset Management, additional C$25 billion of Canadian investment from PSP Investments, and an additional $10 billion from Ontario Teachers' Pension Plan across public and private markets.
Sentiment toward the domestic opportunity set is cautious. Twenty-four percent of attendees described the Canadian private credit market as attractive but capacity-constrained, while 43 percent said it is too small or bank-dominated to deploy meaningful capital. Twenty-nine percent will not consider domestic private credit for their programs, and only 5 percent are looking to expand Canadian exposure. Allocators also show little home bias: 63 percent identified the U.S. as the most attractive region for their next private credit commitment, compared with 8 percent for Canada.
Keith Ambachtsheer, founder of KPA Advisory and director emeritus of the Toronto-based International Centre for Pension Management, attributed the restraint to transparency and liquidity issues in private credit, which he said create logical demand limitations. He noted these issues are unique to the asset class rather than specific to the region. Spread compression is the leading concern, cited by 30 percent of respondents who said there is too much capital chasing deals. Software and technology borrowers exposed to AI disruption, and valuation lag and marketing practices, each drew 17 percent.
When asked where they would most likely add capital over the next year, 31 percent named infrastructure debt, followed by private investment-grade credit at 25 percent and asset-based finance at 19 percent. Economic policy uncertainty does not appear to be the driver of caution: 70 percent said recent headlines have not affected their pace of commitments, though the remainder reported slower but continuing commitments.
The Canadian findings contrast with global momentum. The Alternative Investment Management Association reports double-digit growth in private credit assets under management among its members, and its deputy CEO and global head of government affairs, Jiri Krol, said the growth reflects private credit's expanding role in financing real estate, infrastructure, and asset-based lending. AIMA plans to issue its own report in October. The poll results also come as the Canadian government pushes institutional capital into domestic infrastructure, including a C$50 billion domestic infrastructure fund from CPP Investments and Brookfield Asset Management, additional C$25 billion of Canadian investment from PSP Investments, and an additional $10 billion from Ontario Teachers' Pension Plan across public and private markets.
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