Private Credit’s Liquidity Test Continues as Redemption Caps Return
Investors requested $4.4 billion in redemptions from Blackstone’s BCRED fund in the second quarter, representing 10% of the $79 billion vehicle. Blackstone will limit actual withdrawals to 5% of the fund, or roughly $2.2 billion, after paying out the full 8% requested in the first quarter. The fund collected about $1 billion in new capital during the quarter but continues to shrink from its peak of $82 billion at the end of 2024.
Redemption pressure across the private credit sector has mounted this year as investors grew concerned about rising defaults and exposure to software companies. Blue Owl faced withdrawal requests for 22% of its flagship fund in the first quarter, while Cliffwater saw 17% redemption requests in the second quarter. Blackstone and several competitors initially waived their standard 5% quarterly caps to reassure clients but have now reverted to those limits.
Shares of private credit managers fell earlier this week after Partners Group and Cliffwater disclosed withdrawal figures, but Blackstone stock rose 7% on Thursday following its announcement. The firm remains down 20% for the year, while rivals Blue Owl and Ares Management both gained more than 4.5% on the day. The funds at issue are structured as business development companies and marketed to wealthy individuals seeking high yields from middle-market corporate loans.
Most private credit funds sold to individual investors include 5% quarterly redemption caps designed to prevent forced sales of illiquid loans. Apollo Global Management, Ares, and BlackRock maintained those limits throughout the first quarter while Blackstone, Blue Owl, and Cliffwater temporarily lifted them. The widespread return to capped redemptions indicates managers are prioritizing fund stability over short-term client appeasement as outflows persist.
The post Private Credit’s Liquidity Test Continues as Redemption Caps Return appeared first on Propmodo.
