With private credit playing a more prominent role in Canada’s financial ecosystem, this session brought together experts to better understand what private credit is, what role it plays in the economy, and what benefits and risks are associated with an expansion of the private credit market. The panel included Christian Hensley from Avondale Private Capital, Jérôme Marquis from CDPQ Fixed Income, Anthony Peccia from GRI and John Trivieri from Meridian Credit Union.

Moderator Audrie Chad led the discussion with the panelists representing different parts of the private credit market. Christian spoke about the important role that private credit serves in filling the financing gap left by the banking sector, which is unable to serve a large part of the market due to regulatory constraints. Anthony added that banks, for the most part, will not lend to small businesses, and that the rise in private credit can be attributed in part to the sharp increase in new small businesses since the pandemic.

Asked if private credit is riskier than bank financing, Jérôme stressed that all investment involves risk, and that private credit is not simply a lender of last resort. He said that while private lenders typically have higher rates than banks, many borrowers are happy to pay a small premium in exchange for more flexibility, adding that private capital remains much more affordable than the other alternative, private equity.

The panelists largely agreed that private credit and the banking sector are complementary and that any regulation of the private credit market would risk driving away capital.