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BlackRock Warns It Would Be ‘Folly’ to Ignore Home Capital Woes

  • The situation is isolated for now but it ‘can get messy’
  • Disorderly fallout could hurt credit markets and economy
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Photographer: Brent Lewin/Bloomberg
Updated on

The longer Home Capital Group Inc.’s woes continue, the bigger the risk of a disorderly fallout that could hurt credit markets and Canada’s economy, said Aubrey Basdeo, head of local fixed income at BlackRock Inc.

Home Capital has disclosed a run on deposits since April 19, when the securities regulator accused it of misleading investors. While the alternative mortgage lender has rebutted the allegations and is broadly viewed as small and unrepresentative of the property or financial sectors, its troubles forced a rival to seek a funding backstop and have sparked concern of a slowdown in lending. The Canadian dollar fell to a 14-month low this week.