What Moved
The Bank of Canada had no scheduled rate decision in November, holding the overnight rate at 1.75%. Canadian economic data was broadly stable — employment held up, inflation remained near the 2% target, and GDP growth was moderate (StatsCan, Nov 2019). For those considering the accredited investor requirements in Canada and whether to access private markets, the environment remained constructive.
Canadian housing markets continued to strengthen. Toronto reported its strongest November sales in years, and prices were up across most segments. Montreal set records. Even Vancouver showed signs of stabilization, with sales volumes recovering from their 2018-2019 lows (CREA, Nov 2019).
In private credit, the housing recovery was translating directly into MIC business. Several large MIC managers reported record origination volumes and strong capital inflows. The sector's assets under management had grown materially over the course of 2019, driven by investor demand for yield and a steady supply of borrowers.
Canadian PE deal flow picked up in Q4, consistent with typical year-end patterns. Several notable transactions were announced in the technology and healthcare sectors, and fund managers were optimistic about 2020 pipelines (CVCA, Q4 2019).
What It Means
The housing recovery was now undeniable and was becoming the dominant theme for Canadian private market investors. After the stress-test adjustment of 2018, the market had found a new equilibrium — and demand was building again.
For MIC investors, this was a double-edged dynamic. Growing origination volumes and rising collateral values were near-term positives. But rapid growth in any lending sector warrants scrutiny. The question was whether MIC managers were maintaining underwriting discipline as volumes increased, or whether the competitive pressure to deploy capital was leading to looser standards.
The best MIC managers were using the healthy environment to be selective — choosing the strongest borrowers and most conservative loan-to-value ratios. Others were stretching for volume. The difference might not show up in current default rates, but it would matter when the cycle turned.
For PE investors, the improving economic backdrop and stable rates supported deal activity and exit valuations. The year-end push was creating opportunities for investors with capital to deploy. Across the Canadian alternative investments landscape, the combination of healthy fundamentals and strong institutional flows suggested the sector was entering 2020 from a position of strength.
What We're Watching
Bloomberg's annual housing bubble ranking was expected soon. Canada had consistently ranked among the most overheated markets globally, and the housing recovery was likely to reinforce that positioning — a data point that Canadian regulators and policymakers would note.
The BoC's December 4 decision would be the last of the year. With the economy stable and housing recovering, a hold was nearly certain — but the statement would set expectations for 2020.
Year-end capital flows in private markets were worth tracking. Tax planning often drives late-year investment decisions, particularly into tax-efficient structures like MICs and flow-through shares.
Closing
November's message: the Canadian private market engine was running well. Housing was recovering, private credit was growing, and PE was active. The conditions were favorable — and that was precisely when disciplined investors paid closest attention to risk management.
For the full quarterly analysis, see Q4 2019: Canada's Housing Bubble Warning.
Alts Insider provides educational content for Canadian accredited investors. This is not investment advice. Always consult qualified professionals before making investment decisions.