Wall Street Banks Cap Private Credit Withdrawals

Sentiment has been dented by concerns over valuations, transparency, and specific bankruptcies like auto-parts supplier First Brands and car dealership Tricolor, where private-credit lenders held exposure. Rapid advances in AI also threaten traditional business models of software companies, a significant holding for many private credit funds, such as 19% of Blackrock's HLEND portfolio and 13% of Blue Owl's assets.

U.S. banks had nearly $300 billion in loans outstanding to private-credit providers and $340 billion in unused lending commitments as of June 2025, according to Moody’s data. JPMorgan Chase reduced the value of some loans to private-credit funds, particularly those with software exposure, a move that will reduce future lending.

Morgan Stanley's North Haven Private Income Fund limited redemptions to 45.8% of the 11% requested, while Blackrock's HLEND distributed $620 million, hitting its 5% limit after $1.2 billion in Q1 withdrawal requests. Apollo Global's $25 billion fund capped redemptions at 5% after 11.2% of shares were sought for withdrawal.

Blackstone's BCRED allowed $3.7 billion in withdrawals, raising its cap to 7%, with Blackstone and its employees injecting $400 million to meet requests, marking its first quarter of outflows according to JPMorgan analysts. Blue Owl Capital sold $1.4 billion in assets from three credit funds and permanently halted redemptions at one fund.

Cliffwater's flagship fund capped repurchases at 7% after 14% of shares were sought for redemption. These actions indicate funds are curbing risk and managing liquidity to avoid forced asset sales.