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Canadian firms hold C$500B in private credit exposure, mostly in US
Pension funds and insurers account for most of the holdings, while the Bank of Canada sees direct domestic risks as manageable.
Canadian financial institutions and investment funds have accumulated about C$500 billion ($360 billion) of private credit exposure, with most of it outside Canada, according to new Bank of Canada research.
The activity is concentrated in the US and driven largely by pension funds and insurers. Large Canadian pension funds held C$215 billion at the end of 2025, equal to about 9% of invested assets.
The three largest life insurers held slightly more than C$200 billion in the first quarter of 2026, or about 22% of their invested assets, the paper said.
Canadian investment funds held about C$54 billion of private credit in 2025, up more than 60% since 2020. More than two-fifths of those holdings were linked to real estate, though private credit represented only about 1.5% of the funds’ total net assets.
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Canadian banks also had at least C$40 billion of loans outstanding to private-credit asset managers in the first quarter, mostly to US-based funds. The central bank said those exposures were relatively well protected.
Private non-bank loans account for about 15% of the credit liabilities of Canadian private non-financial companies, a share that has remained broadly stable for a decade. Banks and debt markets still provide more than three-quarters of their financing.
The Bank of Canada said direct risks appear manageable because pension funds and insurers have long investment horizons and limited reliance on short-term funding. It warned, however, that limited transparency and complex structures make vulnerabilities difficult to assess.