Finance Monthly - October 2021

How has the pandemic affected private credit funds in Canada? The COVID-19 pandemic, which has quickly morphed into a global humanitarian crisis and economic disaster, has added a new layer of complexity. And while the supportive subsidy programs initiated by the Canadian Federal Government have enabled companies to continue to operate, these subsidies will soon come to an end and will no longer provide a band-aid to troubled companies, particularly lower-middle market companies. During COVID transactional flow has remained strong in Canada, however, we are not seeing as many financing opportunities that intersect with our approach to credit structuring as a substantial percentage of non-essential distressed lower to middle-market companies are currently being supported through government subsidies and, perhaps reluctantly, traditional lenders. As such, Canadian private credit funds have been proactive in preparing for, what is believed to be, a tremendous amount of future deal flow as these companies prepare for the government financial assistance to end in the near term and are already beginning to assess their capital needs in order to identify potential liquidity and liability mismatches and are seeking to bridge the gaps – especially as the traditional covenant governed credit facilities provided by the traditional banks continue to proactively assess the credit quality and future of these companies following the elimination of government financial assistance. FrontWell is in an ideal position, with its experienced team of asset- based and corporate banking professionals, to expeditiously and strategically assist these companies with their capital needs Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s 31