The bank said its exposure reflects a 20 per cent tie to software lending—primarily middle-market loans—and “a few” business development companies, TD Cowen analyst Mario Mendonca wrote in a note to clients following a private capital markets event with the bank. (The Logic)

Talking point: While Canadian banks have increased lending to non-depository financial institutions (NDFIs), analysts say lenders are emphasizing their exposure to collateralized loan obligations, which can create indirect links to the same borrowers backed by private credit funds. CIBC said its internal stress tests—based on scenarios more severe than the financial crisis—resulted in “immaterial losses.” Private credit accounts for about 5 per cent of Canadian banks’ total consolidated loans at the end of last year, according to RBC Capital Markets analyst Darko Mihelic. CIBC also pointed to relatively low credit stress, with Canadian financial institutions’ total gross impaired loans—a metric used to measure the total value of loans that are in default or close to default—of $233 million in the first quarter this year, “very low” relative to $61 billion in NDFI exposure. On AI, the bank expects investment to be driven primarily by reinvesting efficiency gains rather than reducing head count.