Reuters: Panic in the private credit market spreads to Wall Street, with multiple banks and funds restricting redemptions

Odaily reported that as investors' concerns about private credit risk rise, several Wall Street giants and private credit funds are taking measures to address potential pressures. Some US banks are tightening loans to private credit, while funds are restricting investor redemptions. According to Moody’s data, by June 2025, US banks will have provided nearly $300 billions in loans to private credit, another $285 billions to private equity funds, with unused credit lines reaching $340 billions. Market concerns stem from issues of valuation and transparency, as well as private credit exposure risks revealed in bankruptcy cases such as First Brands and Tricolor. Analysts point out that investors remain doubtful about exposure to software and technology assets, and with liquidity tightening, the private credit market may remain under pressure in the short term. The main actions taken by Wall Street giants and private credit funds include:

1. JPMorgan Chase has marked down the valuation of some private credit loans related to the software sector, reducing further lending.

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

3. BlackRock imposed a 5% redemption cap on the HPS Corporate Lending Fund, with $1.2 billions in redemption requests in the first quarter, but only $620 millions were paid out.

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

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

6. Cliffwater limited the fund’s quarterly redemption ratio to 7% to address about 14% of investor redemption requests in the first quarter. (Reuters)