Private credit markets are experiencing significant unrest, spilling over into Wall Street as major U.S. banks tighten lending practices and some funds impose withdrawal caps. This tumult has been fueled by rising concerns about valuations, transparency, and the implications of recent bankruptcies, such as those of auto-parts supplier First Brands and car dealership Tricolor, which have exposed private-credit lenders to heightened risk.
As reported, U.S. banks had nearly $300 billion in loans outstanding to private-credit providers as of June 2025, in addition to $285 billion lent to private-equity funds and $340 billion in unused lending commitments to these borrowers, according to Moody’s data. Amidst this turbulent environment, shares of alternative asset managers have also faced declines, largely due to investor fears about the valuations of software companies they finance, particularly as advancements in artificial intelligence threaten to upend traditional business models.
In the first quarter of the year alone, investors withdrew billions from leading private-credit funds, a trend that may intensify. Major firms such as Ares Management, Oaktree, and Goldman Sachs have yet to update their investors on the results of first-quarter tender offers within their private-credit portfolios.
JPMorgan Chase has taken steps to reduce the value of certain loans to private-credit funds in response to adverse market conditions affecting software companies. This decision involved a thorough review of its financing portfolio, with adjustments made on a loan-by-loan basis. Sources indicate that while these re-markings are not common, they are deemed necessary to mitigate risks associated with market fluctuations.
Meanwhile, Morgan Stanley has restricted redemptions in its North Haven Private Income Fund (PIF) after investors requested withdrawals amounting to nearly 11% of its shares outstanding. The fund, which was spread across 312 borrowers in 44 different industries, managed to return approximately $169 million, about 45.8% of the total requested withdrawals. Citing challenges like uncertainty in mergers and acquisitions and a contraction in asset yields, the firm has opted to impose limits on its quarterly repurchase offer to avoid forced asset sales during market instability.
Blackrock, the world’s largest asset manager, reported substantial withdrawal requests from its flagship HPS Corporate Lending Fund (HLEND), which saw $1.2 billion in requests in the first quarter, roughly 9.3% of its net asset value. The fund opted to cap further withdrawals after fulfilling $620 million under its redemption program due to concerns about structural mismatches between investor capital and the duration of the private credit loans.
Apollo Global also announced a capping of redemptions at five percent of its $25 billion private credit fund after requests reached around 11.2%. The firm justified the decision by emphasizing the importance of maintaining liquidity without undermining asset value.
Likewise, Blackstone experienced a surge in withdrawal requests for its private-credit fund, BCRED, allowing clients to pull out a total of $3.7 billion from its $82 billion portfolio. The firm raised its usual redemption cap from five to seven percent to accommodate investor withdrawals and even injected $400 million from its own reserves to meet the outflow demands.
Blue Owl Capital announced plans to sell $1.4 billion in assets from three of its credit funds as a means to return capital to investors and pay down debt, while also halting redemptions at one of its funds. The debt sell-off includes loans across various sectors, with a notable portion tied to the beleaguered software and services industry.
Investors in Cliffwater LLC‘s flagship private-credit fund sought to redeem around 14% of shares in the first quarter, prompting the firm to cap repurchases at seven percent. As an interval fund, it is required to repurchase shares quarterly but exercised discretion to manage withdrawals amid market pressures.
Overall, as private credit markets navigate through significant volatility, both banks and investment firms are taking proactive measures to mitigate risk, reflecting a broader trend of caution in financial markets as economic uncertainties mount.
