Key Takeaways
- • Roughly $13 billion has been sought for withdrawal from more than a dozen private credit funds this quarter, but with 5% quarterly caps investors have accessed only about two-thirds of the cash requested, according to Bloomberg estimates and Robert A Stanger & Co. data.
- • More than $4.6 billion of investor capital is trapped behind withdrawal limits, with Apollo Global Management and Ares Management the latest firms to restrict redemptions, joining BlackRock and Morgan Stanley.
- • Across tender-reporting funds with about $133 billion in net assets, redemption requests total almost 10%, roughly double the level from three months earlier, ranging from about 1.4% at Golub Capital Private Credit Fund to roughly 14% at Cliffwater Corporate Lending Fund.
- • Blue Owl Capital's upcoming tender results are the most closely watched signal for sector pressure, with its Blue Owl Technology Income Corp. fund facing withdrawal requests above 15%.
- • Industry participants warn that redemption pressure could create a feedback loop in which limits deter new subscriptions, with Citigroup and Corbin Capital Partners among those flagging the risk.
Summary
A wave of redemption requests across the private credit industry has left more than $4.6 billion of investor capital trapped behind withdrawal limits, with more managers expected to impose restrictions in the coming weeks. Investors have sought to pull roughly $13 billion from more than a dozen funds this quarter, according to Bloomberg estimates and data from Robert A Stanger & Co. Because many vehicles cap quarterly withdrawals at 5% of net assets, investors have been able to access only about two-thirds of the cash they requested.
Apollo Global Management and Ares Management this week became the latest firms to limit redemptions, joining BlackRock and Morgan Stanley. Attention now turns to Blue Owl Capital, which last quarter took several steps to avoid restricting withdrawals. Its Blue Owl Credit Income Corp. fund saw redemptions of around 5.2% and was able to meet them, while the smaller Blue Owl Technology Income Corp. fund received requests above 15%, which were also met. Several Blue Owl tender windows close by the end of the month, and the firm has borne market concern over private credit's exposure to software companies vulnerable to AI disruption and broader lending standards.
Across the private credit funds tracked by Bloomberg that have reported tender results this quarter, net assets total about $133 billion and withdrawal requests have reached almost 10%. Individual results have varied widely, from about 1.4% for the Golub Capital Private Credit Fund to roughly 14% for the Cliffwater Corporate Lending Fund, which set its cap at 7%. Ares said most of its redemption requests, which totaled 11.6% for the Ares Strategic Income Fund, came from a limited number of family offices and smaller institutions. Blackstone did not limit withdrawals at its Blackstone Private Credit Fund despite requests reaching 7.9%, citing the staying power of its institutional capital.
Corbin Capital Partners' John Cocke said the market expects redemption requests to keep rising, warning of a feedback loop in which withdrawal limits make it harder to attract new investors. Citigroup's Michael Anderson said managers must balance the needs of remaining investors against those seeking liquidity. Apollo president Jim Zelter said the industry may have failed to clearly explain liquidity restrictions to investors seeking exits, noting that requests above limits are typically pro-rated, in some cases paying less than half of what was requested. Private credit funds reviewed by Bloomberg have still raised more than $5 billion gross so far this year, well below prior quarters, according to Raymond James' Larry Herman, who expects redemptions could remain elevated.
Apollo Global Management and Ares Management this week became the latest firms to limit redemptions, joining BlackRock and Morgan Stanley. Attention now turns to Blue Owl Capital, which last quarter took several steps to avoid restricting withdrawals. Its Blue Owl Credit Income Corp. fund saw redemptions of around 5.2% and was able to meet them, while the smaller Blue Owl Technology Income Corp. fund received requests above 15%, which were also met. Several Blue Owl tender windows close by the end of the month, and the firm has borne market concern over private credit's exposure to software companies vulnerable to AI disruption and broader lending standards.
Across the private credit funds tracked by Bloomberg that have reported tender results this quarter, net assets total about $133 billion and withdrawal requests have reached almost 10%. Individual results have varied widely, from about 1.4% for the Golub Capital Private Credit Fund to roughly 14% for the Cliffwater Corporate Lending Fund, which set its cap at 7%. Ares said most of its redemption requests, which totaled 11.6% for the Ares Strategic Income Fund, came from a limited number of family offices and smaller institutions. Blackstone did not limit withdrawals at its Blackstone Private Credit Fund despite requests reaching 7.9%, citing the staying power of its institutional capital.
Corbin Capital Partners' John Cocke said the market expects redemption requests to keep rising, warning of a feedback loop in which withdrawal limits make it harder to attract new investors. Citigroup's Michael Anderson said managers must balance the needs of remaining investors against those seeking liquidity. Apollo president Jim Zelter said the industry may have failed to clearly explain liquidity restrictions to investors seeking exits, noting that requests above limits are typically pro-rated, in some cases paying less than half of what was requested. Private credit funds reviewed by Bloomberg have still raised more than $5 billion gross so far this year, well below prior quarters, according to Raymond James' Larry Herman, who expects redemptions could remain elevated.
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