BlackRock restricts redemptions! Crisis in the US private credit market spreads

BlackRock, the world’s largest asset management firm, recently announced restrictions on redemptions for a $26 billion private credit fund, sparking widespread concerns about liquidity in the private credit market. This redemption restriction by BlackRock is a microcosm of the recent liquidity pressures in the U.S. private credit industry, following large-scale redemption requests faced by leading alternative asset managers such as Blackstone and Blue Owl.

CITIC Securities analysts believe that the U.S. private credit market has expanded rapidly in recent years and has become an important funding source for AI and technology companies. While the market is growing quickly, it also faces multiple risks, including relatively lax regulation, insufficient disclosure, and liquidity mismatches. Investors are advised to closely monitor the market’s future developments.

BlackRock Restricts Redemptions in Its Private Credit Fund

Recently, BlackRock announced restrictions on redemptions for its $26 billion HPS Corporate Lending Fund (referred to as “HLEND”), drawing significant attention to liquidity in the U.S. financial markets.

According to a statement from BlackRock, investors in HLEND requested to redeem 9.3% of their shares, but the fund management team decided to cap redemptions at 5%. BlackRock characterized this move as a “fundamental” liquidity management measure, stating that without restrictions, there would be a “structural mismatch” between investor capital and the fund’s private credit loan durations. Bloomberg estimates that the total value of redemption requests was about $1.2 billion, with approximately $620 million approved for redemption—equivalent to 5% of the fund’s net asset value at year-end.

Following the announcement, BlackRock’s stock price closed down 7.17% on March 6 local time. Shares of alternative asset managers like Blue Owl and Ares Management also declined. Previously, Blue Owl announced the sale of $1.4 billion in private credit loans to address redemption pressures.

Blackstone, another major player in alternative assets, also faced large redemption requests for its private credit fund. Blackstone’s BCRED fund manages $82 billion, with redemption requests reaching a record 7.9% this quarter—exceeding the legal limit of 7%. Bloomberg reports that Blackstone’s flagship private credit fund met the record 7.9% redemption request, with some of the funds coming from the firm and its employees to manage withdrawals.

“Redemption restrictions” are just one aspect of the broader private credit crisis in the U.S. financial markets. On February 25, 2026, UK mortgage provider Market Financial Solutions Ltd (MFS) filed for bankruptcy amid allegations of fraud and asset re-pledging, intensifying concerns about the private credit market. MFS’s lenders include Jefferies, Barclays, Santander, Wells Fargo, and Apollo Global Management, with total risk exposure exceeding £2 billion. Since late February, U.S. financial stocks have come under significant pressure.

Spread of the U.S. Private Credit Market Crisis

Private credit generally refers to loans or quasi-loans provided directly to companies by non-bank financial institutions outside the public markets. This business model has existed for a long time but has surged in popularity in the U.S. since 2008. Currently, the market is dominated by major firms such as Ares Management, Apollo, and Blackstone, with North America and Europe as the primary markets.

According to the Alternative Credit Committee (ACC) report, as of December 2025, the global private credit market’s assets under management reached $3.5 trillion. Moody’s reports that as of June 2025, U.S. banking sector loans to non-deposit financial institutions totaled $1.2 trillion, with about $300 billion flowing to private credit lenders and approximately $285 billion to private equity funds.

The current wave of redemption pressures on private credit funds raises concerns about three main issues: whether industry lending standards remain prudent, the exposure of invested companies to disruptive AI impacts, and recent macroeconomic uncertainties globally. Previously, UBS credit strategists raised their default rate forecast for private credit from 13% to 15% amid “extreme” disturbances among corporate borrowers. The current default rate is around 4%.

CITIC Securities analysts note that the U.S. private credit market has expanded rapidly in recent years and has become a key funding source for AI and tech companies. However, the market’s relatively loose regulation, insufficient disclosure, and potential risks pose multiple hidden dangers.

Specifically, U.S. private credit assets tend to have low liquidity, lack a public trading market, and are often invested through closed-end funds, which can lead to liquidity mismatches between assets and liabilities. Additionally, many private credit loans have floating interest rates, which can increase repayment burdens if benchmark rates stay high. The market’s transparency is limited, and the lack of public disclosure mechanisms can distort asset valuations. Under conditions of insufficient information, issues like multiple collateral and financial fraud among borrowers can be difficult to detect effectively.

CITIC Securities also highlights that the scale of borrowing by AI and tech companies has grown significantly in recent years. With AI commercialization still uncertain and high industry capital expenditure needs, any disruption in AI financing or delays in project progress could lead to default risks. Meanwhile, the Federal Reserve’s pace of rate cuts has slowed, keeping rates high, and the U.S. economy is slowing, raising concerns that AI-driven disruptions could impact the software industry. As a result, there is a potential for rising default rates in the private credit market. Although U.S. corporate profitability and overall balance sheets remain resilient, investors should remain highly attentive to future developments.