Ares Restricts Withdrawals Amid Private Credit Surge
Ares Management capped withdrawals at 5% from its $10.7B private credit fund after $1.2B in redemption requests, fulfilling only ~$524M. The fund still grew due to $708M in new commitments, but liquidity stress is rising across the $2T private credit market, with $13B requested this quarter and $4.6B unmet. Concerns over loan quality, slower PE exits, and aging LBOs are driving investor caution. Despite this, Ares reports a healthy portfolio and ~$5B liquidity, highlighting opportunity for long-term holders. Source: Financial Times
This is notable news from Bloomberg given Apollo's standing in private credit:
"Apollo Global Management Inc. is curbing redemptions from one of its largest non-traded private credit funds for retail investors, becoming the latest alternative asset manager to grapple with a surge in such requests. The $25 billion business development company, Apollo Debt Solutions, capped withdrawals at 5% of outstanding shares Monday after clients sought to redeem 11.2%." Source: Mo El Erian on X, Bloomberg
Private credit exploded over the past decade
Source: The Icahnist
This is not good news for a market segment that is already challenged to separate signal from noise...
Source: Bloomberg, Mo El Erian
Private Credit Faces Early-Year Withdrawal Pressure
In Q1, wealthy investors requested over $10B from major private credit funds. Blackstone, BlackRock, and Morgan Stanley are limiting withdrawals to ~70%. Apollo, Ares, and Goldman Sachs will report soon. Though small relative to $1.5T in direct lending, private credit’s fast growth and $9T U.S. retirement exposure mean liquidity strains could test the model’s foundations. Temporary squeeze or early warning? Source: FT
Private credit managers: “If you think debt is impaired, private equity is really cooked”
Also private credit managers: Source: @LeylaKuni, Gain.pro
UBS says private credit defaults could hit 15%.
That's 3x the peak bank loan default rate in 2008. Source: Leadlag report, Michel Gayed
The US private credit exit wave is picking up speed
Cliffwater’s $33B flagship fund capped redemptions at 7% after investors requested 14%—a record, per Bloomberg. Morgan Stanley limited withdrawals to 5% from its North Haven Private Income Fund, and BlackRock recently imposed limits at 9.3%. Pressure spreads as JPMorgan marks down software-linked loans and tightens lending to private credit firms due to concerns over credit quality, loan valuations, and AI disruption. Public BDCs are also under stress: FS KKR Capital ($FSK) saw its NAV premium collapse over 40 points, and Hercules Capital ($HTGC) dropped roughly 30 points. Investors seek liquidity, but options are shrinking. The key question: when will the broader market take notice? Source: FT, Global Markets Investor
