What Moved
The Bank of Canada had no scheduled decision in November, holding at 3.75% ahead of the December meeting. Markets were pricing in another 50bp cut in December, which would bring the overnight rate to 3.25% and cumulative easing to 175bp since June (BoC data, Nov 2024).
Canadian CPI remained near the 2% target, providing the Bank with continued justification for easing. The inflation battle that had dominated 2022-2023 was effectively won (StatsCan, Nov 2024).
Housing recovery signals strengthened across major markets. Sales volumes improved across major markets, and prices showed modest year-over-year gains in several regions. The recovery was orderly — not a return to 2021 frenzy, but a healthy normalization of activity (CREA, Nov 2024).
Private credit conditions were the healthiest since before the tightening cycle. MIC managers reported improving portfolio metrics: lower delinquency rates, fewer extensions, healthier borrower coverage ratios, and steady distributions. New origination was proceeding at terms that balanced attractive yields with improving market conditions.
PE exit activity was picking up, with improving public market valuations and corporate confidence supporting both strategic and financial buyer interest.
What It Means
November's data painted a picture of broad-based healing. The private credit sector had navigated the most challenging rate cycle in a generation and emerged demonstrably stronger. The lessons of Bridging, Ninepoint, and Romspen had been absorbed — managers were more transparent, governance was tighter, and underwriting was more conservative than during the boom years.
For investors, the recovery was creating a choice: deploy more capital into alternatives that were now delivering on their thesis, or wait for even better conditions. The case for deployment was strong — yields remained above historical averages, market conditions were improving, and the quality of available opportunities was high.
The housing recovery was particularly significant for the MIC sector. The combination of lower rates, recovering prices, and improving transaction volumes was restoring the fundamental economics that make mortgage-backed private credit attractive. The excesses of 2020-2021 had been corrected, and the market was functioning on a more sustainable basis.
For PE, improving exit conditions were beginning to translate into realized returns for investors. Distributions from existing funds were increasing, and the track record of 2022-2023 vintage investments was becoming visible — generally strong, reflecting the conservative underwriting of those challenging periods. The secondary market for PE fund interests was also gaining traction, with several Canadian fund-of-funds and institutional investors using secondaries to rebalance portfolios and access liquidity without forced sales of underlying positions.
What We're Watching
The December BoC decision and its implications for the 2025 outlook were the immediate focus. A 50bp cut to 3.25% was widely expected.
Year-end capital allocation decisions were underway. Institutional and accredited investor appetite for alternatives heading into 2025 would shape fundraising conditions.
The 2024 year-in-review data from CVCA and industry sources would provide a comprehensive picture of the recovery.
Closing
November confirmed that the recovery was real, sustainable, and broadening. For those allocating to Canadian alternative investments, the combination of strong yields, improving fundamentals, and a constructive policy environment made a compelling case for alternatives as a core portfolio allocation — not just a yield supplement, but a strategic position.
For the full quarterly analysis, see Q4 2024: The Easing Accelerates.
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