With some US hedge funds placing bearish bets against Canada, or at least threatening to do so in various media outlets, the so-called “Great White Short” could still shape up to be a bust.  

Much of the gloomy sentiment surrounding Canada seems to be due in large part to investors extrapolating what happened in the US during the lead-up to the Great Financial Crisis to the present situation up north. But Canada’s financial system is structured differently than the one in the US, and Canadian borrowers also tend to behave more responsibly than their counterparts down south.

The notion of the Great White Short really gained traction when famed hedge fund manager Steven Eisman, whose exploits betting against the US housing market were chronicled in Michael Lewis’ “The Big Short,” cited Canada’s housing market as a worrisome situation for its banks.

To be sure, the Canadian economy is slowing, and it’s too soon to tell whether financial regulators have engineered a soft landing for the formerly overheated housing market. But real estate is not the only area investors are scrutinizing for portents of doom.

In fact, skeptics have also been focusing on high levels of debt to household disposable income. At the end of 2012, according to Statistics Canada, the ratio of debt to disposable income reached an all-time high of 165 percent, up roughly 50 percent over the past decade. By comparison, the US figure peaked at 164 percent in late 2007, just prior to the Great Recession.

Such numbers have even prompted outgoing Bank of Canada Governor Mark Carney to warn that the central bank could raise interest rates if Canadians don’t curtail their borrowing.  

Household debt encompasses mortgage debt as well as consumer debt, including credit cards and home equity loans. Mortgage debt typically comprises the majority of household borrowing. To that end, Canada tightened mortgage regulations last year, and that’s definitely had a cooling effect on the housing market by forcing many prospective first-time homebuyers to remain renters. That, in turn, has dampened the rate of growth in household debt.

So what about consumer credit? According to credit-card data compiled by Equifax Canada and Moody’s Analytics, although consumer credit has grown strongly over the past few years, borrowers have been managing their obligations reasonably well. Since 2011, the rate of growth in consumer credit has slowed, and over the past year, the amount of available credit outstanding grew just 2.2 percent.

Meanwhile, outstanding balances haven’t changed much over the past five years, despite the fact that Canadians actually hold more credit cards than in the past. Beyond that, Moody’s predicts that delinquency rates will bottom at 3 percent over the next 12 months.

Canadian banks also offer an encouraging perspective. The Wall Street Journal recently asked the CFOs of two of Canada’s Big Six banks their opinions on the debt-to-personal-income ratio, since both are on the front lines of consumer lending.

Toronto-Dominion Bank’s CFO Colleen Johnston said they’re not seeing any meaningful changes in the metrics regarding creditworthiness or on-time payment rates. She characterized the overall credit metrics as the best they’ve had in over five years.

National Bank of Canada CFO Ghislain Parent largely echoed this assessment, noting that credit quality is stable.   

Of course, the ability of borrowers to continue paying their bills is largely dependent on the jobs market. Moody’s cautions that if Canada’s slowdown devolves into a deeper recession, then consumer delinquencies could rise as high as 4.5 percent to 5 percent.

Fortunately, the unemployment rate has remained fairly steady, ranging between 7 percent and 7.5 percent over the past two years. And the Bank of Canada projects that economic growth will accelerate to 2.8 percent in 2014 from 1.5 percent this year.

For now, at least, Canadians have shown they have the ability to shoulder great debt with great responsibility.

The Roundup

Here’s when Portfolio Holdings will report numbers for the first quarter of 2013. Those that have revealed firm dates for announcements are noted as “confirmed,” while we provide an “estimate” for those yet to make specific commitments. Follow the links to read our analysis of those companies that have already reported.

Conservative Holdings

• AltaGas Ltd (TSX: ALA, OTC: ATGFF)–May Portfolio Update
• Artis REIT (TSX: AX-U, OTC: ARESF)–May 7 (confirmed)
• Bird Construction Inc (TSX: BDT, OTC: BIRDF)–May 14 (estimate)
• Brookfield Real Estate Services Inc (TSX: BRE, OTC: BREUF)–May 7 Maple Leaf Memo
• Brookfield Renewable Energy Partners LP (TSX: BEP-U, OTC: BRPFF)–May 8 (confirmed)
• Canadian Apartment Properties REIT (TSX: CAR, OTC: CDPYF)–May 7 (confirmed)
• Cineplex Inc (TSX: CGX, OTC: CPXGF)–May 9 (confirmed)
• Davis + Henderson Income Corp (TSX: DH, OTC: DHIFF)–May 7 (confirmed)
• Dundee REIT (TSX: D-U, OTC: DRETF)–May 8 (confirmed)
• EnerCare Inc (TSX: ECI, OTC: CSUWF)–May 14 (confirmed)
• Innergex Renewable Energy Inc (TSX: INE, OTC: INGXF)–May 14 (confirmed)
• Keyera Corp (TSX: KEY, OTC: KEYUF)–May 7, after the market’s close (confirmed)
• Northern Property REIT (TSX: NPR, OTC: NPRUF)–May 8 (confirmed)
• Pembina Pipeline Corp (TSX: PPL, NYSE: PBA)–May 9 (confirmed)
• RioCan REIT (TSX: REI, OTC: RIOCF)–May 7 Maple Leaf Memo
• Shaw Communications Inc (TSX: SJR/A, NYSE: SJR)–May Portfolio Update
• Student Transportation Inc (TSX: STB, NSDQ: STB)–May 10 (confirmed)
• TransForce Inc (TSX: TFI, OTC: TFIFF)–May Portfolio Update

Aggressive Holdings

• Acadian Timber Corp (TSX: ADN OTC: ACAZF)–May 9 (confirmed)
• Ag Growth International Inc (TSX: AFN, OTC: AGGZF)–May 15 (confirmed)
• ARC Resources Ltd (TSX: ARX, OTC: AETUF)–May Portfolio Update
• Atlantic Power Corp (TSX: ATP, NYSE: AT)–May 14 Maple Leaf Memo
• Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF)–May 15 (confirmed)
• Colabor Group Inc (TSX: GCL, OTC: COLFF)–May Portfolio Update
• Crescent Point Energy Corp (TSX: CPG, OTC: CSCTF)–May 9 (confirmed)
• Enerplus Corp (TSX: ERF, NYSE: ERF)–May 10 (confirmed)
• Extendicare Inc (TSX: EXE, OTC: EXETF)–May 9 (confirmed)
• IBI Group Inc (TSX: IBG, OTC: IBIBF)–May 17 Flash Alert
• Just Energy Group Inc (TSX: JE, NYSE: JE)–May 16 Flash Alert
• Newalta Corp (TSX: NAL, OTC: NWLTF)–May 7 Maple Leaf Memo
• Noranda Income Fund (TSX: NIF-U, OTC: NNDIF)–May 15 (confirmed)
• Parkland Fuel Corp (TSX: PKI, OTC: PKIUF)–May 7, after the market’s close (confirmed)
• PetroBakken Energy Ltd (TSX: PBN, OTC: PBKEF)–May Portfolio Update
• Peyto Exploration & Development Corp (TSX: PEY, OTC: PEYUF)–May 8 (confirmed)
• Vermilion Energy Inc (TSX: VET, OTC: VEMTF)–May Portfolio Update
• Wajax Corp (TSX: WJX, OTC: WJXFF)–May 10 (confirmed)