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

Odaily According to Reuters, 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 to private credit, while funds are restricting investor redemptions. Moody's data shows that as of June 2025, U.S. bank loans to private credit amounted to nearly $300 billion, 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 private credit during bankruptcies like First Brands and Tricolor. Analysis indicates that persistent investor skepticism towards exposure to software and technology assets, coupled with liquidity tightness, may continue to pressure the short-term private credit market. Key actions by major 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 restricted redemptions for the North Haven Private Income Fund, fulfilling only about 45.8% of investor requests in the first quarter to avoid market mismatches.

3. BlackRock imposed a 5% limit on redemptions for the HPS Corporate Lending Fund. With $1.2 billion in redemption requests in Q1, only $620 million was paid out.

4. Blackstone's BCRED fund saw net redemptions of $1.7 billion in Q1. Employees injected $400 million to fill the gap, and the quarterly redemption cap was raised 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%, responding to approximately 14% of investor redemption requests in the first quarter. (Reuters)