Summary: Market unease in private credit is translating into tangible actions on Wall Street: some banks have lowered marks on loans to private-credit funds or reduced financing, and multiple large private-credit funds have restricted redemptions or altered their redemption mechanics after heavy withdrawal requests. The moves reflect investor concerns about valuations, limited transparency and recent borrower bankruptcies that left some private lenders exposed.
Private-credit market turbulence has begun to manifest across the broader financial system, prompting several of the largest U.S. banks and alternative-asset managers to adjust lending and redemption practices as they confront rising investor redemptions and portfolio strains. The caution stems from concerns tied to valuations and opacity in parts of the private-credit universe, and from specific credit events that have highlighted exposure pathways.
Among the triggers cited by market participants are the bankruptcies of an auto-parts supplier, First Brands, and car dealership group Tricolor, both of which involved losses for some private-credit lenders. That backdrop has exacerbated worries about the underlying collateral and the valuation methodologies applied to private-credit portfolios.
Data cited from Moody's show the scale of banking ties to the sector: U.S. banks held nearly $300 billion in loans to private-credit providers as of June 2025, had extended roughly $285 billion to private-equity funds and carried about $340 billion in unused lending commitments to those borrowers.
Concerns have also weighed on shares of alternative asset managers this year. Market participants point to questions over the valuations of software companies that some managers either own or finance, and to the prospect that rapid advances in artificial intelligence could disrupt established business models for those software firms. Those valuation worries appear to be one factor prompting investors to withdraw billions from some of the largest private-credit funds in the first quarter, with the possibility of additional outflows.
Several large managers that oversee private-credit vehicles - including Ares Management, Apollo Global, Oaktree and Goldman Sachs - had not provided updated outcomes for first-quarter tender offers at their private-credit funds at the time of reporting.
Selected actions by banks and private-credit funds
JPMorgan Chase - The largest U.S. bank has re-evaluated and reduced the reported values on a subset of loans to private-credit funds after reviewing the impact of market stress, particularly around software-exposed positions, according to people familiar with the matter. JPMorgan conducted a line-by-line review of its financing portfolio, assessing names and sectors individually and applying updated marks on loans with underlying software exposure, the sources said.
Those sources said the re-marking of loans is an infrequent step but one the bank can take when market conditions warrant it. JPMorgan's credit agreements in the private-credit space permit the bank to re-mark valuations based on the collateral of a fund in the event of a market dislocation. The sources described the size of the adjustments as not significant, while also noting that applying lower marks will reduce the bank's lending capacity to affected private-credit players.
Morgan Stanley - Morgan Stanley limited redemptions at its North Haven Private Income Fund (PIF) after investors sought to redeem nearly 11% of the fund's outstanding shares, according to a regulatory filing. As of January 31, PIF was invested across 312 borrowers spanning 44 industries.
The fund returned about $169 million in the quarter, representing roughly 45.8% of the quarter's tender request. In a letter to investors, Morgan Stanley Private Credit highlighted multiple headwinds facing direct lending, including uncertainty around the pace of M&A recovery, a pullback in asset yields and market speculation about credit deterioration. The firm's letter said keeping appropriate limits on quarterly repurchases helps avoid forced asset sales during periods of market dislocation.
BlackRock - BlackRock restricted withdrawals from its flagship HPS Corporate Lending Fund (HLEND) after a sharp spike in investor requests. In the first quarter the fund received $1.2 billion in withdrawal requests, equal to about 9.3% of its net asset value. Under its quarterly redemption program, HLEND distributed $620 million, reaching the 5% threshold at which managers can curb further withdrawals.
HLEND said the 5% limit helps prevent a structural mismatch between investor capital and the expected duration of the private-credit loans in which the fund invests. Company documents show 19% of HLEND's portfolio is concentrated in software. Net subscriptions to the fund were $840 million in the first quarter, lower than the $1.2 billion in withdrawal requests it originally received.
Blackstone - Blackstone's flagship private-credit vehicle, BCRED, experienced a substantial uptick in redemption requests in the first quarter. The firm allowed clients to redeem $3.7 billion from the $82 billion fund; after adding $2 billion in new commitments, net withdrawals amounted to $1.7 billion. In response, the fund raised its standard 5% quarterly redemption cap to 7% and Blackstone, alongside its employees, contributed $400 million to meet redemptions.
Analysts at JPMorgan noted that this marked the first quarter of outflows at BCRED, which is the largest private-credit fund of its type that does not trade on public markets.
Blue Owl - Blue Owl Capital said on February 19 that it planned to sell $1.4 billion of assets from three of its credit funds to return capital to investors and pay down debt, and that it would permanently halt redemptions at one of those funds. The assets for sale cover loans to 128 portfolio companies across 27 industries, with the largest single sector concentration at 13% in software and services.
The affected loans sit inside three credit vehicles: $600 million in Blue Owl Capital Corp II, $400 million in Blue Owl Technology Income Corp and $400 million in Blue Owl Capital Corp. Blue Owl's co-President Craig Packer said the firm was changing the method by which it provides redemptions.
Cliffwater - Cliffwater LLC faced investor redemption requests equal to about 14% of outstanding shares in its flagship private-credit fund during the first quarter, leading the firm to cap its repurchase program at 7%, according to reporting. As an interval fund, Cliffwater is required to repurchase shares each quarter and set its repurchase rate at 5%, with discretion to repurchase as much as 7% when warranted.
Collectively, these steps by banks and fund managers illustrate how strains in segments of the private-credit market can transmit across balance sheets and to investors. They also underscore the practical constraints that managers face when running illiquid loan portfolios with multi-year durations while offering periodic liquidity to investors.
Market participants and lenders appear focused on aligning liquidity mechanics, revisiting loan valuations and limiting payout amounts to avoid forced asset sales and to preserve fund integrity during episodes of heightened withdrawal pressure.
While some managers and banks have implemented temporary caps, sales or re-markings to manage liquidity, other firms named in the broader cross-section of private-credit managers had not provided immediate updates on their first-quarter tender outcomes at the time of reporting.
Key takeaways
- Private-credit market concerns over valuations and transparency have prompted banks and asset managers to restrict lending or cap redemptions.
- Borrower bankruptcies and concentrated exposure to software assets have intensified investor scrutiny and withdrawal activity from private-credit funds.
- Large banks' financing ties to private-credit and private-equity vehicles represent a substantial channel through which strain in the private-credit market can affect the broader financial system.