Reuters: Panic in Private Credit Market Hits Wall Street, Multiple Banks and Funds Restrict Redemptions

Odaily News As investor concerns over private credit risks intensify, several major Wall Street banks and private credit funds are taking measures to address potential pressures. Some U.S. banks are tightening lending for private credit, while funds are restricting investor redemptions. According to Moody's data, as of June 2025, U.S. banks have provided nearly $300 billion in loans for private credit, with an additional $285 billion lent to private equity funds, and an unused credit line of $340 billion. Market concerns stem from valuation and transparency issues, as well as risks exposed in bankruptcies such as First Brands and Tricolor. Analysis points out that investors remain skeptical of exposure to software and tech assets, coupled with tight liquidity, suggesting the short-term private credit market may continue to face pressure. The main actions taken by Wall Street banks and private credit funds include:

1. JPMorgan Chase has marked down valuations for some private credit loans related to the software sector and reduced further lending.

2. Morgan Stanley has restricted redemptions for its North Haven Private Income Fund, fulfilling only about 45.8% of investor requests in the first quarter to avoid market mismatches.

3. BlackRock has imposed a 5% limit on redemptions for its HPS Corporate Lending Fund, with $1.2 billion in redemption requests in the first quarter but only $620 million distributed.

4. Blackstone's BCRED fund saw net redemptions of $1.7 billion in the first quarter, with employees injecting $400 million to fill the gap, and raised the quarterly redemption cap from 5% to 7%.

5. Blue Owl Capital sold $1.4 billion in assets to repay investors and permanently halted redemptions for one fund.

6. Cliffwater limited its fund's quarterly redemption ratio to 7%, in response to approximately 14% of investors requesting redemptions in the first quarter. (Reuters)