Private credit: requests ease, redemption queues persist

Private credit has been showing signs of easing pressure in recent weeks, but two figures need to be separated: redemption requests and redemptions actually paid. Several large U.S. vehicles aimed in particular at wealthy investors received fewer requests in the third quarter of 2026 than in the previous quarter. Those requests nevertheless remain well above contractual repurchase caps. The decline therefore means neither that investors have recovered all the capital they asked for nor that liquidity pressure has disappeared.

Blackstone provides a concise illustration of the mechanism. Its Blackstone Private Credit Fund received requests covering about 10% of shares in the third quarter, while net outflows amounted to roughly 3% of NAV. Some of the requests were unfulfilled orders from the previous quarter that were resubmitted, while fresh subscriptions offset part of the redemptions. A request to exit therefore does not translate into an equivalent cash outflow.

These funds lend directly to companies through loans that trade only sparsely in secondary markets. Some vehicles simultaneously offer quarterly repurchase windows, usually capped around 5%. When requests exceed that threshold, the unfulfilled portion can be resubmitted later. The speed at which this queue clears then becomes as important as the headline request ratio.

Ares and Apollo: fewer new requests

At the $22.7 billion Ares Strategic Income Fund, requests covered 13.1% of common shares outstanding in the third quarter, down from 14.4% in the previous quarter. The fund intends to repurchase up to 5% of shares. In its September 24 SEC filing, Ares said net new requests represented about 3% of NAV and had fallen by roughly 60% from the second quarter and 70% from the first.

That detail changes how the 13.1% figure should be interpreted. Unfulfilled orders do not automatically carry forward: investors must resubmit them. Ares therefore says much of the third-quarter volume came from repeat requesters. Under the fund's illustration, an investor who first tendered in the first quarter and continued resubmitting the unfulfilled balance would have recovered nearly 80% of the originally requested capital after the third-quarter cycle. This estimate comes from Ares and depends on each investor's circumstances.

At the $25.9 billion Apollo Debt Solutions BDC, requests fell from 16.8% to about 14.7% of shares. Apollo will repurchase 5%. The manager says most requests also came from investors resubmitting earlier orders. After third-quarter payments, Apollo estimates that investors seeking liquidity in 2026 will have received about 75% of the capital requested. Quarterly net outflows are expected to be roughly $500 million, or 3% of NAV, after about $200 million of gross subscriptions.

BlackRock and Morgan Stanley show the same pattern

The trend is also visible at BlackRock and Morgan Stanley. The $23.1 billion HPS Corporate Lending Fund received requests covering about 11.5% of shares in the third quarter, down from 13.3% previously, against a 5% repurchase cap. At Morgan Stanley, North Haven Private Income Fund recorded requests equal to 11.4% of shares, compared with 11.6%. Nearly two-thirds came from investors who had not been able to exit fully in the previous two offers. Other BlackRock vehicles faced less pressure, with requests of 4.58% at BlackRock Private Credit Fund and 1.9% at HPS Corporate Capital Solutions Fund.

These examples point in the same direction: new requests appear to be easing, while older resubmitted orders keep headline ratios elevated. The Financial Times describes an easing of the turmoil without concluding that conditions have fully normalised. There is still no consolidated public measure showing, across the whole market, how much of third-quarter demand comes from genuinely new sellers rather than resubmitted backlogs.

The issue is a liquidity mismatch

The vehicles at the centre of the debate mainly hold directly originated loans that are typically kept for years and trade infrequently. Selling large amounts quickly can require discounts. Repurchase caps therefore reduce the risk of forced sales. The trade-off is that an investor seeking to exit may need several quarters to receive the requested cash.

Ares illustrates both the available resources and the limits of disclosure. The fund reports more than $4 billion of undrawn capacity across committed debt facilities, alongside other liquidity sources. That figure comes directly from Ares: it indicates funding capacity but does not independently measure what the entire loan portfolio could realise under stressed selling conditions.

Valuations are differentiating borrowers more sharply

Liquidity pressure is interacting with credit quality. A Reuters analysis of regulatory filings from 44 U.S. business development companies found that their investments had a combined fair value of $92.88 billion on June 30, compared with $95.19 billion of reported or amortised cost. At the end of 2025, the gap had been narrower: $95.82 billion of fair value against $96.54 billion of cost.

Second-quarter markdowns were concentrated among a relatively small number of borrowers, including some leveraged software and services companies facing disruption linked to artificial intelligence. The figures therefore do not show uniform deterioration across private credit, but rather greater dispersion between borrowers and sectors.

The ECB and IMF do not describe an immediate systemic threat

In its May Financial Stability Review, the European Central Bank concluded that direct exposure of euro-area financial institutions to private credit remains limited. It therefore sees private credit alone as unlikely to be a source of systemic instability in the euro area at present. The ECB nevertheless warns that losses could spread to insurers and pension funds if stress reached leveraged loans, high-yield bonds or equities.

The ECB highlights three vulnerabilities: limited asset liquidity, less transparent valuations than in public markets, and links with other financial institutions. In open or semi-open vehicles, a large mismatch between asset liquidity and the liquidity offered to investors can amplify stress if forced selling becomes necessary.

The IMF estimates the global direct-lending universe at around $2 trillion. Roughly 15%, or close to $300 billion, is held in semi-liquid structures allowing redemptions. In the IMF's assessment, repurchase gates currently help contain systemic risk. That assessment could change if a much larger share of the sector became redeemable.

Asia-Pacific follows a different path

Comparison with Asia helps avoid generalising U.S. stress to the entire market. The Straits Times reported in late August that private credit was still expanding in Asia-Pacific, where funds are more often closed-ended and generally have less exposure to software. Great Eastern invested about $100 million in Granite Asia's first private-credit fund, which exceeded its $500 million fundraising target. Moody's, cited by the newspaper, nevertheless expected regional fundraising growth to slow because of economic uncertainty, geopolitical tension and high interest rates.

Hong Kong has meanwhile tightened requirements for some funds exposed to private markets. Authorised funds with direct or indirect private-market exposure equal to at least 50% of NAV must be reclassified as complex products. The Securities and Futures Commission cited transparency, illiquidity, valuation challenges and credit risk. For now, the Asian issue is therefore more about product structure and distribution than about large redemption queues.

Converging sources, but different interests

Reuters relies mainly on U.S. regulatory filings and separates gross requests, backlogs and net outflows. The Financial Times focuses on the easing of pressure among wealth investors while remaining cautious about its durability. The ECB and IMF examine the issue primarily through the lens of financial stability. The Straits Times and South China Morning Post show how Asia's more closed-ended structures and distribution rules alter the nature of the risk.

No clear conflict of interest is apparent in the editorial treatment by Reuters, the Financial Times, the ECB, the IMF, the South China Morning Post or The Straits Times. Several key data points, however, come directly from fund managers. Statements by Ares, Apollo, Blackstone, BlackRock and Morgan Stanley about portfolio resilience, future fulfilment of requests or normalisation of flows should therefore be read as issuer information, even when included in regulatory filings. Analyst estimates are identified as such when they are used to interpret the data.

From investors to companies: the transmission channel

Redemption pressure can reach the real economy in several steps: an investor asks to exit, the fund protects its liquidity, and may then become more selective in making new loans. Borrowers could face lower credit availability, higher spreads or tighter covenants. That transmission remains a risk rather than a broad observed outcome: available data do not currently show a market-wide contraction in private lending caused by redemption requests.

Reuters points to an important contrast with the institutional market. While some wealth-focused vehicles have faced outflows, global institutional private-credit fundraising had reached $33 billion in the third quarter through August 25 after rebounding in the second quarter, according to Goldman Sachs. More than 85% of private-credit assets are held in institutional funds, according to the same source. The redemption pressure observed so far is therefore concentrated in some semi-liquid vehicles, with no equivalent move demonstrated across institutional private credit as a whole.

The next test will be less about headline request ratios than about three measures: net new requests, the speed at which queues clear and changes in borrower valuations. If all three improve at the same time, the case for normalisation will become stronger. For now, third-quarter data point to measurable easing, but not yet a complete return to conditions before the 2026 stress.

FAQ

Why does 13% of redemption requests not mean 13% of cash left the fund?

Because the vehicles concerned generally cap quarterly repurchases at around 5%. The unfulfilled portion can be resubmitted in a later window. The request rate measures an intention to exit, not the amount of cash actually paid out.

Are redemption requests really falling?

Yes at several major funds in the third quarter, but a significant share still consists of earlier requests. At Ares, net new requests equal about 3% of NAV according to the fund, far below the 13.1% gross request ratio.

Does private credit currently threaten financial stability?

The ECB and IMF do not describe an immediate systemic threat. They continue to monitor liquidity mismatch, opaque valuations, leverage and links with insurers, pension funds and public credit markets.