Colin Kilgour is a principal at Kilgour Williams Capital and has been active in the Canadian credit and structured finance market since 2001. A pedestrian walks past the Bank of Canada in Ottawa, on June 10.The Canadian Press/The Canadian Press Canadian investors and banks now have an estimated $500-billion of exposure to private credit lending, most of it directed at the United States, underwritten by non-bank institutions and held beyond the public eye. In a market that has

There has been turmoil and much media attention in the private credit space lately as some very large private credit managers in the United States have had challenges with liquidity, portfolio concentration, and write-downs. Investors are understandably nervous. We have previously written about why this has come about (here), and also how investors can evaluate private credit alternatives so that they don’t find themselves caught up in this turmoil (here). At Kilgour Willia

Private credit is an established and valuable asset class for yield-seeking investors. But some large blue-chip investment managers like Blackstone and Blue Owl have recently taken write-downs in their private credit offerings. The asset class remains strong, but certain private credit strategies are inherently flawed. Private Credit Goldrush Prior to the Covid-19 pandemic, inflation and interest rates were very low. Investors who traditionally would have held bonds for th

In the spring of 2023, Colin and I gave a talk at an investor conference that was entitled How to Not Get F***ed in Private Credit. This was soon after several prominent Canadian credit funds made negative headlines for “gating redemptions”, meaning telling their investors that they could not have their investments back in accordance with the fund’s standard redemption terms. Those investors may or may not have been able to get their money back by now. (Okay, mostly not.)