Blackstone capped withdrawals from its flagship $79 billion private credit fund at 5% after investor redemption requests surged to 10% in the second quarter, marking a sharp reversal from the firm’s decision to pay out all requests earlier this year.
The world’s largest asset manager announced the restriction on its Blackstone Private Credit Fund, known as BCRED, on Thursday as fears of liquidity pressures in the private credit market deepened. Investors asked to pull $4.4 billion from the fund, up from about 8% redemption requests in the first quarter.
Blackstone fulfilled 100% of redemption requests in the first quarter by raising its cap and using employee capital to cover the remaining amount. But with redemptions climbing further in Q2, the firm said it would limit payouts to the standard 5% threshold. The decision underscores mounting strain on managers of large private credit funds marketed to wealthy individual investors.
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The withdrawal caps have rippled across the sector. Partners Group, a Swiss private markets giant, disclosed similar restrictions on one of its European private equity vehicles and warned it was prepared to limit redemptions in more funds. Cliffwater reported investors requested to redeem 17% of shares in its $31 billion private credit fund in the second quarter.
Blackstone’s announcement came as credit delinquencies hit their highest level since the financial crisis, adding to concerns about asset quality in the sector. Daniel Ivascyn, Pimco’s chief investment officer, warned last week that “there’s a lot going on beneath the surface” and that the industry faces “the first sustained default or loss cycle in many, many years.”
Sources
- CNBC — Blackstone’s announcement of the 5% cap on BCRED redemptions and the jump in requests from 7.9% to 10%; confirmation of Q1 policy reversal.
- WSJ — Investor redemption requests totaling $4.4 billion and Blackstone’s decision to limit payouts to 5%.
- Reuters — Blackstone’s withdrawal restrictions and the broader private credit market stress.
- Bloomberg — Fund size of $79 billion and the 5% redemption cap.
