Blackstone has for the first time restricted withdrawals from its private credit fund

Investors in Blackstone's flagship private credit fund filed to withdraw $4.5 billion in the second quarter, forcing the company to limit redemptions for the first time. Blackstone is the world's largest private equity group, and its decision signals increasing pressure on the private lending market, the Financial Times said.

Investors in the $45 billion Blackstone Private Credit Fund (Bcred) have submitted withdrawal requests totaling about 10% of the fund's net assets, according to the fund's letter to investors. The company granted the requests only for an amount equivalent to 5% of assets, the first time it has applied the restrictive mechanism envisioned.

The fund remains well capitalized and has more than $15 billion in liquidity, including cash and available credit lines. In addition, proceeds from new investments and repayments of prior loans continue to exceed redeemed units, according to the investor letter.

Blackstone changed its stance after it decided to fully honor withdrawal requests in the first quarter of 2026 despite exceeding the 5% threshold. This then caused discontent among competitors and wealth management advisers. They feared it would give investors the false impression that the so-called "semi-liquid" funds they had bought provided more liquidity than was promised when they were sold, the Financial Times said.

The company last month attributed the rise in redemption requests to increased media and market attention to the private credit sector, as well as investor concerns about slowing yields. New investor commitments to the fund fell to about $350 million a month in April and May, 70% below the 2025 monthly average, the Financial Times noted.

Outflows from private credit funds have put a severe strain on this $2 trillion market, which has been actively attracting capital from wealthy private and retail investors in recent years, the FT writes.

An additional concern is the rapid development of AI, which has called into question the prospects of many enterprise software developers - a key borrower segment for private credit funds, notes the Financial Times.

Other private credit funds, including Apollo Global Management, BlackRock, and Blue Owl, imposed similar restrictions earlier this year due to increased redemption requests in their funds.

The Bcred fund, whose portfolio including debt financing reaches $79 billion, has already been forced to lower the valuation of a number of assets this year. In particular, the fund recorded losses on loans of software developer Medallia and wrote off part of the value of the loan of dental network Affordable Care, writes FT.

Jamie Dimon, the head of JPMorgan, the largest US bank by assets, said in February that he sees a situation in the financial market reminiscent of the situation before the 2008 crisis. According to Dimon, high competition and lower standards are pushing individual market participants to take excessive risks. "I see a few players doing foolish things to build up net interest income," the JPMorgan chief added.

This article was AI-translated and verified by a human editor