Blackstone, Cliffwater cap withdrawals amid credit turmoil
Private credit has long appealed to investors seeking steady returns and the perception of accessible capital. But events over the past week may have challenged those expectations.
Blackstone and Cliffwater both restricted investor withdrawals from their flagship private lending funds after second-quarter redemption requests surged past quarterly limits.
The restrictions come as the $1.8 trillion private credit market, as estimated by Bloomberg, faces growing scrutiny over whether these vehicles can handle sustained withdrawal pressure.
For individuals holding positions in non-traded credit vehicles through retirement or brokerage accounts, the developments align with a point Gresham House CEO Tony Dalwood made on CNBC: that retail investors in private market vehicles need to understand how liquidity limits operate during periods of stress.
Blackstone's BCRED caps withdrawals for the first time in fund history
Blackstone's $79 billion Private Credit Fund, known as BCRED, told shareholders it would limit second-quarter redemptions to 5% of shares after investors requested roughly 10%.
That request translated into approximately $4.4 billion in withdrawal demand relative to net asset value, making it the largest redemption surge the fund has ever faced.
It marked the first time BCRED has held its quarterly repurchase ceiling firm rather than expanding it to satisfy every redemption request, a notable shift for the largest non-traded BDC by assets.
In the first quarter, Blackstone took an unusual step when investors sought to redeem a then-record 7.9% of the fund's shares. The firm raised its quarterly ceiling and tapped employees to invest their capital, fulfilling every withdrawal request in the prior period.
This quarter, with demand climbing to 10%, the fund enforced its standard 5% threshold and did not repeat that approach.
The fund has generated a 9.3% annualized total return for Class I shares since its 2021 launch, Blackstone noted in an investor letter.
BCRED currently pays a 10% distribution rate for those shares, the company indicated in the filing with the Securities and Exchange Commission.
Cliffwater's lending fund faces even steeper redemption pressure
Cliffwater's $31.3 billion Corporate Lending Fund reported an even sharper surge, with investors requesting 17% of shares in the second quarter, Reuters reported.
That figure rose from 14% in the prior period, and the fund slashed its withdrawal cap to 5% from 7% in the first quarter.
More Personal Finance:
- Fidelity has a warning for anyone who left a 401(k) at an old job
- Living trusts: what they do and who needs one
- Fidelity sounds alarm on 401(k)s, IRAs
At that ratio, shareholders who requested full redemptions received roughly 29 cents for every dollar they sought to withdraw from the fund.
Nearly $14 billion was requested across those vehicles in that period, but only about half was actually paid out, TD Economics reported.
New loan issuance by private credit lenders fell about 40% to $44.76 billion in the three months ended May 2026, down from $74.56 billion in the first quarter, PitchBook data showed.
Withdrawal pressure spreads from private credit into private equity
The stress is no longer confined to credit vehicles alone and has begun to spread into private equity structures marketed to wealthy individual investors.
Switzerland-based Partners Group, one of Europe's largest alternative asset managers, capped redemptions on its $8.6 billion Global Value SICAV fund on June 3.
Liquidity features are designed to protect long-term investors, and to ensure that returns continue to be driven by the quality of the underlying private assets rather than by short-term flow dynamics
Withdrawal requests at the private equity fund hit approximately 9.8% of net asset value, nearly double the 5% quarterly threshold, Bloomberg reported.
Partners Group shares fell 17% on the Swiss exchange that day, marking the company's worst single-session decline since its 2006 IPO.
The firm warned it was prepared to apply the same restriction across additional vehicles, including a $16 billion Delaware-domiciled private equity fund.
Second-quarter requests at that vehicle reached approximately 6% of net asset value, just above the 5% cap, Partners Group confirmed on June 4.
Ares Management pushes back on negative private credit coverage
While the data on redemptions is concerning, not everyone in the industry agrees that the underlying assets are deteriorating at that pace.
Blair Jacobson, co-president of Ares Management, told Bloomberg Television on June 4 that a clear gap separates negative coverage from portfolio realities.
Ares' roughly 3,000 portfolio companies worldwide are growing at between 8% and 12% annually, with non-accrual rates below historical averages, Jacobson told Bloomberg Television.
Additionally, Ares CEO Michael Arougheti told Bloomberg's Dani Burger at the Forbes Iconoclast Summit in New York that private credit remains fundamentally sound, and that recent stress is tied to private equity dynamics.
But share prices of the largest publicly traded alternative managers tell a different story: Blackstone, Ares, KKR, Apollo, and Blue Owl all fell in early June.
Those declines came even as the S&P 500 has rallied approximately 10% year to date, underscoring the gap between broad markets and private credit sentiment.
The next redemption cycle will test private credit sector resilience
The second-quarter redemption windows closed on June 7, and the next cycle will serve as a key signal of whether the pressure is peaking.
iCapital, a platform connecting wealth advisors to alternative investments, estimated the current cycle of elevated redemptions could extend across three to five quarters.
That timeline suggests the strain may not ease until late 2026 or early 2027, the firm indicated.
The answer may depend on how borrower fundamentals evolve and whether default rates, which Morgan Stanley projected could reach 8% in 2026, materialize at that level.
Related: Blackstone raises $13.1 billion in key market
The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
This story was originally published June 9, 2026 at 7:07 AM.