$1.8 TRILLION PRIVATE CREDIT INDUSTRY FACES WAVE OF REDEMPTION REQUESTS AS FUNDS CAP WITHDRAWALS AT 5-7%: INFINITYHEDGE
GS AND JPM OFFER HEDGE FUNDS BASKETS TO SHORT PRIVATE CREDIT MARKET
DIMON ORDERED FULL-SCALE INSPECTION OF JPM LOAN BOOKS FOR SOFTWARE EXPOSURE
TIMELINE:
Feb19: Blue Owl Halts Redemptions on Private Credit Retail Fund
Feb25: UK mortgage lender 'MFS' collapsed amid allegations of fraud. They had borrowed more than £2b ($2.7b) from heavyweights incl. Barclays and Banco Santander, claimed to be one of the UK’s biggest providers of short-term bridge loans until its demise
Mar3: Blackstone’s Flagship Private Credit Fund Hit by Record Redemptions; Clients pulled $3.7b from BCRED in Q1
Mar6: BlackRock $26b Private Credit Fund Limits Withdrawals
Mar11: JPM Restricts Some Private Credit Lending After Markdowns
Mar12: Morgan Stanley restricts redemptions at private credit fund after withdrawals surge, honors less than half of 11% redemption requests
Mar12: Cliffwater $33B flagship fund caps redemptions at 7% after investors request record 14% withdrawal, first time exceeding inflows
Mar21: Blackstone flagship private credit fund posted its first monthly loss in more than 3 years: infinityhedge
Mar23: Apollo Caps Private Credit Fund Withdrawals as Requests Hit 11%; gives investors only 45% of requested withdrawals from $15b fund
Mar24: Moody’s cuts rating on private credit fund run by KKR & Future Standard to junk as bad loans grow
Mar24: Ares limits withdrawals from $10.7b private credit fund at 5% after requests hit 11.6%, fulfilled only $524m of $1.2b requests
Mar25: Barclays Pulls Back on Asset-Based Lending After MFS Collapse
VIEWS:
* The shakeout risks delaying the industry's $9T lobbying target: penetrating 401(k) retirement accounts
* Oaktree’s Poli notes that discounts are already "sizeable" in software debt, but the broader "big step-in opportunity" hasn't quite arrived yet, as high-yield bonds are still hovering around 7.1%: infinity-hedge
* DoubleLine CIO: Called private credit the top candidate to spark the next financial crisis
* DB: Flagged a massive $30B exposure to private credit, representing ~5% of its total loan book
* UBS warns private credit defaults could reach 15% in worst-case scenario due to ai disruption of software companies
* Apollo's Zito says Blackrock capping redemptions at 5% was exactly the right decision to protect redeeming & remaining investors
* Boaz warns interval funds overpromised you can get out but it doesn't work if there's actually a fire
* Ares CEO Mike blasts UBS 15% default forecast as actually irresponsible amid private credit software exposure concerns
* GS's Bantwal says limits on fund withdrawals are features not bugs
* MS analyst warns private credit defaults could reach COVID-level 8% as AI disrupts software firms
* Pimco's Stracke says 20-30% exposure to single industries like software prompts investors not wait to see how bad it gets
* DB's Sewing says in more than 10 years we haven't lost one cent in private credit
* JPM est. that software debt accounts for around 30% of all private-credit loans outstanding, while bank-originated debts hover around 10%
* Corbin Capital's Cocke says you cannot create liquidity from illiquid asset class, not enforcing limits creates first-mover advantage
* Fed Chair in 2007 said no significant spillovers from subprime expected, similar to 2026 complacency on private credit
* ECB to start fresh checks on banks' private credit exposure as concerns intensify over loan quality and ai impact
* U.S. banks back private credit with ~$300B (Moody's). IMF est. U.S. & EU banks carry a combined $4.5T exposure to non-bank financial institutions overall
* Evercore ISI: No sympathy for Main Street panicking—"Semi-liquid funds were designed & marketed as products offering limited liquidity... It’s important to retrain the investor base on the nature of private assets."
* JPM's Dimon, last year suggested there were “cockroaches” hiding in the financial system
GS AND JPM OFFER HEDGE FUNDS BASKETS TO SHORT PRIVATE CREDIT MARKET
DIMON ORDERED FULL-SCALE INSPECTION OF JPM LOAN BOOKS FOR SOFTWARE EXPOSURE
TIMELINE:
Feb19: Blue Owl Halts Redemptions on Private Credit Retail Fund
Feb25: UK mortgage lender 'MFS' collapsed amid allegations of fraud. They had borrowed more than £2b ($2.7b) from heavyweights incl. Barclays and Banco Santander, claimed to be one of the UK’s biggest providers of short-term bridge loans until its demise
Mar3: Blackstone’s Flagship Private Credit Fund Hit by Record Redemptions; Clients pulled $3.7b from BCRED in Q1
Mar6: BlackRock $26b Private Credit Fund Limits Withdrawals
Mar11: JPM Restricts Some Private Credit Lending After Markdowns
Mar12: Morgan Stanley restricts redemptions at private credit fund after withdrawals surge, honors less than half of 11% redemption requests
Mar12: Cliffwater $33B flagship fund caps redemptions at 7% after investors request record 14% withdrawal, first time exceeding inflows
Mar21: Blackstone flagship private credit fund posted its first monthly loss in more than 3 years: infinityhedge
Mar23: Apollo Caps Private Credit Fund Withdrawals as Requests Hit 11%; gives investors only 45% of requested withdrawals from $15b fund
Mar24: Moody’s cuts rating on private credit fund run by KKR & Future Standard to junk as bad loans grow
Mar24: Ares limits withdrawals from $10.7b private credit fund at 5% after requests hit 11.6%, fulfilled only $524m of $1.2b requests
Mar25: Barclays Pulls Back on Asset-Based Lending After MFS Collapse
VIEWS:
* The shakeout risks delaying the industry's $9T lobbying target: penetrating 401(k) retirement accounts
* Oaktree’s Poli notes that discounts are already "sizeable" in software debt, but the broader "big step-in opportunity" hasn't quite arrived yet, as high-yield bonds are still hovering around 7.1%: infinity-hedge
* DoubleLine CIO: Called private credit the top candidate to spark the next financial crisis
* DB: Flagged a massive $30B exposure to private credit, representing ~5% of its total loan book
* UBS warns private credit defaults could reach 15% in worst-case scenario due to ai disruption of software companies
* Apollo's Zito says Blackrock capping redemptions at 5% was exactly the right decision to protect redeeming & remaining investors
* Boaz warns interval funds overpromised you can get out but it doesn't work if there's actually a fire
* Ares CEO Mike blasts UBS 15% default forecast as actually irresponsible amid private credit software exposure concerns
* GS's Bantwal says limits on fund withdrawals are features not bugs
* MS analyst warns private credit defaults could reach COVID-level 8% as AI disrupts software firms
* Pimco's Stracke says 20-30% exposure to single industries like software prompts investors not wait to see how bad it gets
* DB's Sewing says in more than 10 years we haven't lost one cent in private credit
* JPM est. that software debt accounts for around 30% of all private-credit loans outstanding, while bank-originated debts hover around 10%
* Corbin Capital's Cocke says you cannot create liquidity from illiquid asset class, not enforcing limits creates first-mover advantage
* Fed Chair in 2007 said no significant spillovers from subprime expected, similar to 2026 complacency on private credit
* ECB to start fresh checks on banks' private credit exposure as concerns intensify over loan quality and ai impact
* U.S. banks back private credit with ~$300B (Moody's). IMF est. U.S. & EU banks carry a combined $4.5T exposure to non-bank financial institutions overall
* Evercore ISI: No sympathy for Main Street panicking—"Semi-liquid funds were designed & marketed as products offering limited liquidity... It’s important to retrain the investor base on the nature of private assets."
* JPM's Dimon, last year suggested there were “cockroaches” hiding in the financial system
