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Bailey McCann, Opalesque New York:

Canadian investment firm Ninepoint Partners has released a new paper outlining the opportunity set for private debt in Canada and worldwide.

The Canadian credit market differs from the U.S. market both in size and the overall structure. As a smaller market, Canada has not been materially affected by recent headwinds in the U.S. banking sector. Private debt fills in the gaps within the Canadian lending market. According to the findings, even though liquidity is tight within Canada, private debt transaction continues. Ninepoint says that the lack of a private credit secondaries market within Canada provides unique opportunities for incumbent direct lenders.

Private debt is also increasingly winning market share from the syndicated loan market worldwide. In 2022, there were roughly five times more deals financed through private debt versus broadly syndicated loans, compared to an average of 1.7 times in the previous three years, the report says.

Ninepoint argues that tighter liquidity is giving private debt firms more leverage when it comes to terms. "Average leverage multiples have come down and formerly popular covenant-light structures are off the table," the report says. "Consequently, private debt deals now enjoy higher equity cushions in private equity-led deals."

Looking ahead, Ninepoint says t......................

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