Monday Market Minute | Oct 31, 2022

Ninepoint Alternative Credit suspends redemptions — a high-profile test for Canadian private credit liquidity

What Moved

Ninepoint Partners suspended redemptions on its Alternative Credit Opportunities Fund, citing the need to protect remaining investors from forced asset sales in a stressed market. The fund, which had offered periodic liquidity against a portfolio of private credit and structured investments, faced redemption requests that exceeded its liquid reserves. The suspension sent ripples through the Canadian exempt-market community, raising questions about other open-ended private credit vehicles facing similar pressures.

Why It Matters

The Ninepoint suspension was the highest-profile liquidity event in Canadian private credit in 2022 and underscored a fundamental structural risk: open-ended funds offering periodic redemptions against illiquid underlying assets carry inherent fragility. For HNW investors, the lesson was that liquidity terms at the fund level must be compared against the liquidity of the underlying portfolio. Closed-end structures, while less flexible, avoided this mismatch entirely. The event also demonstrated that even reputable managers could face liquidity crises when market conditions deteriorated rapidly.

Signal to Watch

Whether Ninepoint would provide a timeline for resuming redemptions and whether other Canadian private credit funds would proactively adjust their liquidity terms in response.

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