Blackstone calls out 'spin cycle' as firm handles record redemption request from flagship private-credit fund

By Joy Wiltermuth and Steve Goldstein

Blackstone said it redeemed more investments than usual in its flagship private-credit fund, in another sign of the stress the industry is facing

Blackstone defended the performance of its flagship private-credit fund on Tuesday, calling out a "spin cycle" that's making investors nervous.

Blackstone president Jonathan Gray on Tuesday defended the performance of the firm's flagship private-credit fund after it handled a record redemption request.

The Blackstone Private Credit Fund, with $82 billion in assets, allowed investors to withdraw a record 7.9% in the past quarter, a sign of jitters among investors around private credit.

During an interview with CNBC on Tuesday, Gray touted improving cash-flow coverage last year as rates fell, and highlighted the credit quality of the more than 400 borrowers in the fund. He also pointed to the fund's 9.8% annualized total return since its inception in 2021, and to its 8% total return last year.

"When we look at this, we feel pretty darn good," Gray told CNBC. He also called out the constant "spin cycle" around private credit that he said has been making investors nervous.

Investors have been on edge about "cockroaches" in private credit ever since this fall's implosion of used-car retailer Tricolor Holdings and car-parts seller First Brands. Last week, U.K.-based mortgage lender Market Financial Solutions also collapsed, sparking a selloff in financial stocks. That came after Blue Owl Capital (OWL) sold a portfolio of its loans, including some in the software sector, in order to start returning funds to investors.

"To me, anybody who has a liquid private-credit fund is likely seeing redemptions," said Mark Melchiorre, chief information officer at Forza Investment Group and a credit-market veteran.

"It's a worry right now, and a justified worry," Melchiorre said in an interview with MarketWatch on Tuesday.

The quarterly Blackstone withdrawal was more than the 5% typically available for repurchase for the fund, known as the BCRED fund. To help meet the redemption requests, the firm had nearly $2 billion of new subscriptions, and Blackstone and its employees also purchased another 0.9% of the fund's shares.

"These investments were about meeting 100% of requests for the quarter with certainty and timeliness," a Blackstone spokesperson said. "They underscore our conviction in BCRED and alignment with its investors."

Shares of Blackstone (BX) fell 2% Tuesday as stocks trimmed losses and investors looked to gauge potential fallout from the Iran conflict.

More broadly in private credit, shares of the popular VanEck BDC Income exchange-traded fund BIZD were up 1% on Tuesday. But the fund still was in its 20th trading day in a bear market.

It first entered a bear market on Feb. 3, when it fell more than 20% from its recent high on July 17, 2025, according to Dow Jones Market Data.

Vishwas Patkar, head of U.S. credit strategy at Morgan Stanley, said in a podcast that the software sector's presence in the loan market grew during the leveraged-buyout wave in 2020 and 2021, so it has weaker credit quality and more leverage than the overall market.

-Joy Wiltermuth -Steve Goldstein

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03-03-26 1525ET