Morgan Stanley has restricted withdrawals from its private credit fund. The stock collapsed

Morgan Stanley has restricted withdrawals from its North Haven private credit fund after a surge in investor requests for withdrawals. Similar measures were taken by other management companies: this increases concern about the whole market, notes the Financial Times. Morgan Stanley shares fell sharply in price after the decision.

According to Morgan Stanley, investors' requests for withdrawals from the North Haven fund in the first quarter of 2026 reached 10.9%, but the bank will satisfy only part of these requests, limiting redemptions to the current limit of 5%. This follows from the fund's filing with the U.S. Securities and Exchange Commission (SEC).

The fund with a volume of about $8 billion has become another player in the private lending market, faced with a sharp increase in requests for withdrawal of funds, writes MarketWatch. Such funds invest in illiquid corporate loans and, as a rule, limit the amount of funds that investors can withdraw during the quarter, the publication explained.

Similar measures were taken by the Cliffwater management company shortly before Morgan Stanley, according to the Financial Times. Its flagship Cliffwater fund of about $33 billion restricted withdrawals after investor requests reached 14% of its capital. Cliffwater agreed to meet about half of the requests, approving a buyout of about 7%, two sources told the FT. Cliffwater had originally planned to buy back 5% of its stakes in a quarter, but US Securities and Exchange Commission rules allow the limit to be increased by a further two percentage points, the Financial Times notes.

Cliffwater has become one of the fastest growing companies in the private lending market, says the FT. According to investment bank RA Stanger, the company raised $16.5bn from wealthy investors last year, the newspaper says.

The rise in withdrawal requests underscores the risks of so-called semi-liquid funds, which offer investors access to private credit but offer only limited opportunities to sell stakes because their assets are rarely traded on the market, the Financial Times notes.

Over the past few months, other management companies, including Blackstone, Blue Owl and BlackRock, have also adjusted their liquidity withdrawal limits, MarketWatch wrote. Investors are increasingly paying attention to the quality of loan portfolios and the level of transparency in the valuation of illiquid assets, the publication added.

"The risk of an 'ATM' scenario is increasing: investors are forced to liquidate positions in other healthy funds simply because they become the main source of available cash - even if those funds are generally sound or operate in a completely different asset class," Allianz advisor Mohamed El Erian noted on Social Media X.

Banks also began to signal possible problems in the sector. In its annual report, Deutsche Bank said its private lending portfolio grew to €25.9 billion, noting the existence of indirect risks in this regard, Bloomberg writes. "The failures of a number of large lenders in the U.S. have increased investor attention to the risks associated with private lending and raised broader concerns about lending standards and the threat of fraud," Deutsche Bank said in the report.

The private credit market, which is valued at about $1.8 trillion, has faced increased investor scrutiny in recent months after a series of corporate defaults and a revaluation of some loans, as well as concerns about exposure to technology companies whose business models could come under pressure from the rapid development of AI, Bloomberg notes.

Corporate debt markets have been under strain since the twin bankruptcies of Tricolor and First Brands Group amid allegations of fraud last September, the Financial Times recalls.

Shares of Morgan Stanley at the end of trading on March 12 fell by 4%. Compared to the beginning of 2026, they are now 13% cheaper.

Blue Owl Capital 's shares fell by 4.6% on March 12. Blackstone shares lost 4.8%, while Apollo Global 's shares fell by 5.5%.

Blue Owl Capital shares are down 42% YTD, Blackstone is down 34%, while Apollo Global Management securities are down about 31%.

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