From the Desk

The eurozone is a veteran at managing stress. In the aftermath of the Great Financial Crisis (GFC) and subsequent sovereign debt crisis, as it teetered on the verge of a breakup, it found a way to survive. At that time, housing booms across the region came to an abrupt end – sovereigns, banks and households were caught off guard. The most vulnerable countries displayed early stress. But it quickly spread as bond investors became aggressive on forcing related countries to pay more to hold their debt. But the doom loop was broken when the head of the European Central Bank in 2012, Mario Draghi, stepped in and assured markets it would “do whatever it takes” to save the euro. 

While the eurozone is not in crisis today, its second largest economy – France – is in a bit of a bind. French debt levels keep growing as politicians fail to deliver a credible fiscal budget. Investors don’t like that. And they are demanding France pay a premium over German bonds that is comparable to the stressed days of the GFC.

The good news is today’s bond stress remains a French problem. There is little evidence of contagion. For instance, Italy has a higher debt load but has worked hard to get its fiscal budget in shape. Greece has done the same and runs a surplus. It’s good news that investor sentiment seems to be more discriminating, by rewarding constructive policymaking.

Analysts are watching for signs France is taking note of what’s working for its neighbors and building more of that into its playbook, and if other G7 peers with heavy debt loads are doing the same. The key message seems to be that you don’t have to immediately fix your debt problem, but have to credibly move in the right direction to bring it down.

Sources: Bloomberg, The Financial Times, 2026.

Investments that sit at the intersection of social infrastructure and private credit offer an interesting example of how institutional capital can meet investors’ objectives by helping levels of government address complex public policy challenges, like affordable housing. As an illustration, certain private debt investors have provided meaningful financing to experienced non-profit housing operators and developers working in partnership with a major U.S. city, providing a capsule example of how such arrangements can work.

The need for affordable housing properties is significant. The city in question continues to face a shortage of affordable housing while also holding a unique requirement to provide shelter and support services to vulnerable populations, particularly the unhoused. Addressing these challenges requires more than public funding alone – it often requires long-term capital partners willing to provide financing.

These investments are predicated on the contractual obligations of the local government to pay rents for buildings in amounts sufficient to cover 100% of debt service due under the loan. In exchange, the city gains use of the property to provide critical housing. Frequently there is a separate contract between the municipality and a services provider to offer social services for this vulnerable population. These rent payments represent committed funding, in that they do not terminate so long as the facility is made available, even in the event of zero occupancy. These financings help create and maintain supportive housing facilities, affordable housing communities and shelter infrastructure that serve thousands of city residents. At the same time, we believe they provide investors with long-duration investments backed by mission-critical services and strong contractual payment streams.

Access to affordable housing and shelters will remain a critical issue across North America. We believe private capital will continue to play an important role in the funding of these property types. For long-term investors, the opportunity is compelling: investment in mission-critical infrastructure supported by strong counterparties as governments seek financing for housing stability.