Private credit strains ripple through Wall Street as investors grow wary

The American flag and Wall St. street sign outside the New York Stock Exchange, in New York. (AP / Mark Lennihan)

Private-credit market jitters have spilled onto Wall Street, with some major U.S. banks tightening lending while the funds have capped withdrawals as mounting concerns prompt firms to curb risk and brace for further strain.

Sentiment had been dented by concerns over valuations and transparency, as well as cases such as the bankruptcy of auto-parts supplier First Brands and car dealership Tricolor, where some private-credit lenders held exposure.

U.S. banks had almost US$300 billion in loans outstanding to private-credit providers as of June 2025, and a further $285 billion lent to private-equity funds, along with $340 billion in unused lending commitments to those borrowers, according to data from Moody’s.

Shares of alternative asset managers have also come under pressure this year amid growing concerns over the valuations of software companies they own or finance, as rapid advances in AI threaten to disrupt traditional business models.

Investors have pulled billions of dollars from some of the biggest private-credit funds in the first quarter - and more could follow.

Funds managed by Ares Management, Oaktree and Goldman Sachs are yet to update investors on the outcome of the first-quarter tender offers at their private-credit funds.

Below is a list of some of the recent moves by Wall Street’s biggest banks and private-credit funds:

JPMorgan Chase

The largest U.S. bank has reduced the value of some loans ‌to private-credit funds after reviewing the impact of market turmoil around software companies, Reuters reported last week, citing two people familiar with the situation.

JPMorgan went through its financing portfolio - name by name and then sector by sector - and put different marks on loans such as those with underlying software exposure, one of the sources said.

The re-marking does not happen often but this isn’t the first time ​the bank has re-marked loans, the first source told Reuters, adding the move was “important to do when markets warrant it rather than waiting for a crisis to ‌come along.”

JPMorgan’s credit agreements for the private-credit space allow it to re-mark valuations based ​on the collateral of the fund if there is a market dislocation, the source said, adding the marks are not significant.

The move to mark down the value of certain loans to private credit players will reduce ​lending to the funds, Reuters reported, citing a source familiar with the matter.

Morgan Stanley

The Wall Street banking giant limited redemptions at one of its private-credit funds after investors sought to withdraw almost 11 per cent of shares outstanding, according to a regulatory filing.

Morgan Stanley’s North Haven Private Income Fund (PIF), which was invested in 312 borrowers across 44 industries as of January 31, returned roughly $169 million, or about 45.8 per cent of investors’ tender request, ​for the quarter.

In a letter to investors, Morgan Stanley Private Credit said the direct-lending industry has faced several challenges, including uncertainty around the M&A recovery, a contraction in asset yields, and speculation about credit deterioration.

“By maintaining appropriate limits on the quarterly repurchase offer, the company seeks to avoid asset sales during periods of market dislocation,” the bank’s investment-management arm said in ​the letter.

Blackrock

The world’s largest asset manager, Blackrock, said on March 6 that it has restricted withdrawals from its flagship HPS Corporate Lending Fund (HLEND) after a jump in requests.

The fund received $1.2 billion in withdrawal requests in the first quarter, equal to about 9.3 per cent of its net asset value. The fund told investors it would distribute $620 million under its quarterly redemption program, reaching the five per cent limit at which managers can curb further withdrawals.

The fund said the five per cent curb ​prevents “a structural mismatch between investor capital ⁠and the expected duration of the private credit loans in which HLEND invests."

Subscriptions to the fund were $840 million in ​the first quarter, ⁠lower than the $1.2 billion that investors originally sought to withdraw. According to company documents, 19 per cent of HLEND’s portfolio is tied up in software.

Apollo Global

Apollo Global’s $25 billion private credit fund said on March 23 it was capping redemptions at five per cent of its shares after ​investors sought to withdraw roughly 11.2 per cent of the total outstanding shares.

The fund said the decision to buy back less than ​investors requested was consistent with its objectives for liquidity, or the ability ⁠to meet its payment obligations without damaging the value of its assets.

The withdrawals leave the fund with about $730 million of gross outflows for the period, balancing ​out inflows of about $724 million.

It expects ‌to ⁠return about 45 per cent of the requested capital to each redeeming investor.

Blackstone

Alternative asset manager Blackstone said on March 2 that its flagship private-credit fund, BCRED, saw a sharp rise in withdrawal requests in the first quarter.

The company let clients pull a bigger-than-usual $3.7 billion from the $82 billion fund. Adding $2 billion of new commitments left net withdrawals at $1.7 billion.

The surge in requests led the fund to raise its usual five per cent quarterly redemption cap to seven per cent, while Blackstone and its employees injected $400 million to meet all withdrawals, the firm said.

JPMorgan analysts said this was the first quarter of outflows at BCRED, the largest of its kind that does not trade on the market.

Blue Owl

Private capital firm Blue Owl Capital said on Feb. 19 that it was selling $1.4 billion in assets from three of its credit funds so it can return capital to investors and pay down debt, and permanently halting redemptions at one of the funds.

The debt Blue Owl is selling cuts across 128 different portfolio companies in 27 industries, but the biggest concentration, 13 per cent, is in the battered software and services sector, the company said.

The loans are held through three credit funds – $600 million in Blue Owl Capital Corp II, $400 million in Blue Owl Technology Income Corp, and $400 million in Blue Owl Capital Corp.

“We’re not halting redemptions, we are simply changing the method by which we’re providing redemptions,” Blue Owl co-President Craig Packer had said.

Cliffwater

Investors in Cliffwater LLC’s flagship private-credit fund ​looked to redeem about 14 per cent of ‌shares in the first quarter, leading the firm to cap its repurchases at seven per cent, according to a report by Bloomberg News.

As an interval fund, it ​is required to repurchase shares every quarter. It set that rate at five per cent, with discretion to ​repurchase as much as seven per cent, the report added.

(Reporting by Arasu Kannagi Basil and Pritam Biswas in Bengaluru; Editing by Sriraj Kalluvila)