Blackstone Inc. (NYSE:BX) has restricted quarterly withdrawals in its $79 billion Blackstone Private Credit Fund after investors asked to redeem a larger slice of shares in the second quarter.
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Blackstone's redemption requests reached about 10% of fund shares for the quarter, up from 7.9% in the prior period, Reuters reported. The fund applied a 5% cap, a common limit for non-traded vehicles that offer periodic buybacks.
Blackstone framed the restrictions as an intentional feature of the product rather than an emergency response.
“BCRED’s structure is a fundamental feature, with investors exchanging some liquidity at times for long-term outperformance,” the firm said in a statement to Reuters.
Evercore analysts called the 10% request level manageable, writing, “We think 10% is better than feared,” while pointing to a separate Cliffwater fund that saw elevated redemption pressure earlier in the week.
Othe Fund Redemptions
The flagship private credit fund of Cliffwater LLC capped redemptions at 5% in the second quarter after investors sought to redeem approximately 17% of the fund's shares. Cliffwater told shareholders of Cliffwater’s Corporate Lending Fund (CCLFX) in a letter that they would receive one-third of the money they requested back.
The analysts also warned that a sharper drop in new money coming into the fund could be a more persistent challenge for BCRED and similar products.
BCRED saw fewer new investors during the period, which contributed to net outflows of roughly 3% of the fund. Blackstone said BCRED remained "well capitalized," citing loan repayments and inflows that exceeded share repurchases.
The tender offer ran from May 1 through May 29, and the fund said requests eased later in that filing period. Blackstone also said fundraising picked up across its other private-wealth offerings even as private credit drew less interest than some other alternatives.
Private credit funds have been capping redemptions at 5% in recent months amid rising concerns over asset quality and valuations in private credit, particularly software lending.
Partners Group is restricting investor withdrawals from its $8.6 billion Global Value SICAV fund after redemption requests exceeded 5% of the net asset value, a move that rattled sentiment across private markets.
The firm pointed to instability across open-ended vehicles since early last year, beginning in private credit and later affecting private equity, Reuters reported.
BlackRock, Ares Management, Morgan Stanley and Barings have also limited redemptions from private credit funds as well.
Last month, JPMorgan Chase & Co. (NYSE:JPM) started restricting lending to software-related companies in its private credit funds.
JPMorgan CEO Jamie Dimon cautioned that periods of calm in credit markets often mask the buildup of risk, warning that performance typically deteriorates more than expected once the credit cycle turns.
“I do think when we have a credit cycle because there have been weakening standards in underwriting and transparency and marking, I do think you’ll see credit perform worse than people expect. That’s all. I don’t think it’s systemic,” he said during the Reagan National Economic Forum.
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