Another redemption wave is spooking the $2 trillion private-credit market

By Joy Wiltermuth

'It's not just blowing over,' says Mark Malek, chief investment officer at Siebert Financial, who is an investor in private credit

Shares of private-equity giants and funds offering individuals exposure to private credit are falling Wednesday.

A fresh wave of investor redemptions has hit the roughly $2 trillion private-credit market, sending shares of the sector's industry giants sharply lower on Wednesday.

This time, the selloff can be pegged to news reports of redemptions that were capped at 5% at the $31 billion Cliffwater Corporate Lending Fund in the second quarter, as well as limits on fund withdrawals at Partners Group (CH:PGHN), a Swiss and U.S. private-equity firm with $185 billion in assets under management.

Cliffwater didn't immediately respond to a request for comment. Partners Group, in a statement released on Thursday, confirmed the withdrawal news and said liquidity features are designed to protect long-term investors. The Swiss firm also will said it will open up an additional window for its employees to buy shares in the affected funds.

"It's not just blowing over," said Mark Malek, chief investment officer at Siebert Financial, who is an investor in private credit. "If these companies didn't have gating provisions, this would be real trouble."

Malek said the situation reminded him of when customers would see lines forming outside a bank with people looking worried, leading to more customers joining the line and taking their money out. While individuals have been looking for an exit, he hasn't seen evidence of panic selling by institutions in the sector.

The private-credit industry and shares of funds offering individual investors exposure to the sector have been under pressure 2026, as shown in the chart below.

Concerns about the sector were building before April, when Blue Owl Capital (OWL) made headlines by limiting redemptions. Blue Owl declined to comment. Its shares fell 3.8% Wednesday, according to FactSet, while those of private-equity giant KKR & Co. (KKR) shed 4.2% and Blackstone's (BX) shares were 4% lower. KKR declined to comment. Blackstone didn't immediately respond to requests for comment.

Investors increasingly have looked to pull funds from private credit. As a snapshot of the trend, a Partners Group report from May pegged industry redemptions from a select group of nontraded business-development companies at more than $12 billion in the first quarter of 2026, of which roughly half were honored.

Wednesday's selloff comes after several boom years that saw double-digit annual returns. Returns have been smaller lately, in a backdrop of persistently higher Treasury yields BX:TMUBMUSD10Y and overall borrowing costs. The Cliffwater corporate fund reported a return of 1.7% on the year so far.

Many investors are now questioning the industry's opaque lending practices and the quality of loans held by funds. Private-credit funds also tend to have larger exposure to loans to the software industry than other established parts of U.S. credit markets.

"I'm not surprised there have been more redemption requestions," said Mike Sanders, head of fixed income at Madison Investments. Gates can limit how much people can pull from a fund, but they may not curb their desire to get their investment back, he said.

Still, Sanders said, tight credit spreads in U.S. corporate bonds and other areas of fixed income signal there isn't currently much spillover from the private-credit mess.

"I think you'll just continue to see a demand for liquidity, and it's going to be interesting to see if funds can provide it at the level they need," Sanders said.

Stocks fell from record highs on Wednesday, with the Dow Jones Industrial Average DJIA positing its biggest daily decline since late March, the S&P 500 SPX snapping a 9-session win streak and the Nasdaq Composite Index COMP ending lower.

-Joy Wiltermuth

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06-04-26 0414ET