Monday Market Minute | Nov 03, 2025

Private credit closes record Q3 — pipeline strength signals a strong finish to 2025

What Moved

Canadian private credit managers reported their strongest quarter of deployment in Q3 2025, with an estimated $12 billion in new originations across the sector. The pipeline was driven by three converging forces: bank retrenchment from mid-market lending, ongoing mortgage refinancing demand, and PE-sponsored acquisition financing. Credit quality metrics held steady, with portfolio-level default rates below 2% and recovery rates above 80% on resolved positions. Several prominent managers began raising successor funds, citing capacity constraints in current vintages.

Why It Matters

The Q3 data cemented private credit's status as the fastest-growing alternative asset class in Canada. For accredited investors, the case was increasingly straightforward: private credit offered 8-10% yields with senior-secured collateral, low correlation to public markets, and demonstrated resilience through the 2025 trade disruption. The asset class had matured from a niche allocation to a core portfolio building block. The remaining challenge was access — the best-performing managers were capacity-constrained, and allocators who had delayed deployment risked missing the optimal vintage window.

Signal to Watch

Whether the BoC's December decision would compress or stabilize base rates, which would determine whether private credit's absolute yield advantage over public fixed income remained at the current historically elevated level.

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