The chorus of disapproval for private credit gets louder as Morgan Stanley fund is the latest to cap withdrawals

By Jules Rimmer

Morgan Stanley was obliged to cap redemptions at 5% on its North Haven private income fund

Morgan Stanley capped redemptions on a private-credit fund.

Another day, another private credit fund capping withdrawals, and another well-known commentator expressing concern about the sector.

Morgan Stanley's (MS) $8 billion North Haven Private Income Fund became the latest vehicle that did not meet the redemption demands of its investors - saying in a Securities and Exchange Commission filing that it's capping withdrawals at the pre-existing 5% limit of shares, far below the 10.9% requested.

This followed hot on the heels of a similar crisis at Cliffwater's private credit fund that became apparent in the last few days and after a string of highly-publicized problems experienced by the likes of Blue Owl (OWL), Blackstone (BX) and BlackRock (BLK) in meeting their investors' liquidity demands.

DoubleLine Capital founder and well-regarded industry expert, Jeffrey Gundlach, expressed his concerns in a posting on X Wednesday. Known as the bond king Gundlach predicted that JPMorgan (JPM) is demanding more collateral for loans to private credit because, in his opinion, "collateral values are down from the loan origination debt."

Further concerns were flagged by a Goldman Sachs (GS) executive during a conference call with investors this week. Co-chief executive of Goldman Sachs International, Kunil Shah, was reported by the Financial Times to have claimed the bank's private-markets clients were "just glad there's something to talk about that isn't software exposures and private credit,", referring to the conflict in Iran. This wasn't helpful for sentiment in the sector.

The private-credit industry has been on alert since the defaults last year of Tricolor and First Brand that prompted JPMorgan CEO Jamie Dimon to warn of "cockroaches" in the market for privately held loans. Those concerns have been heightened in 2026 as private credit firms with significant exposure to those parts of the technology sector considered vulnerable to AI disruption, like Blue Owl and KKR (KKR), have seen their share prices plummet.

In late February, the shares of FS KKR Capital Corporation (FSK) dropped 15% in one trading session after it revealed it would be sharply reducing both its dividend and its valuation of assets in the portfolio.

Investors and analysts are worried about underwriting standards in the industry, the transparency of the valuation process for unlisted assets and the quality of loan portfolios. Redemption requests from investors who might be worried about the threat to software companies from AI have overwhelmed the capacity of the credit funds to raise liquidity at short notice in illiquid markets.

To alleviate some of these concerns, Apollo, for example, managing almost $1 trillion of assets, is planning to report net asset values of its funds on a monthly basis, aiming for a daily valuation at some point in the future, according to interview one of its executives gave to Bloomberg Television.

-Jules Rimmer

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03-12-26 0617ET