Author: Heathermorris2

The unease in the private credit market has spread to Wall Street; as many funds set withdrawal limits, some major U.S. banks have tightened lending to the trillion sector.

Concerns over valuations and transparency, along with the high-profile bankruptcies of auto parts supplier First Brands and car dealer Tricolor, have negatively impacted the market.

According to Moody’s, as of December 31, U.S. banks had approximately $348 billion in credit debt to non-depository financial institutions and $341 billion to private equity funds.

Shares of alternative asset managers have also declined this year due to concerns about the valuations of the software companies they own or finance; as rapid advancements in artificial intelligence pose a threat to traditional business models.

Below is a list of some recent moves by Wall Street’s largest banks and private equity funds:

BLUE OWL

Private capital firm Blue Owl Capital said on April 2 it would cap withdrawals from two retail-focused funds after receiving a surge in redemption requests.

Investors asked to withdraw 40.7% of the shares in technology-focused Blue Owl Technology Income Corp (OTIC), and 21.9% of shares in larger fund Blue Owl Credit Income Corp (OCIC).

Blue Owl in late February said it was selling $1.4 billion in assets from three of its credit funds so it can return capital to investors and pay down debt, ​and permanently halted redemptions at one of the funds.

“We’re not halting redemptions, we are simply changing the method by which we’re providing redemptions,” Blue Owl co-President Craig Packer had said at the time.

JPMORGAN CHASE

The largest U.S. bank ​has reduced the value of some loans to private credit funds after reviewing the impact of market turmoil around software companies, Reuters reported last week, citing two people familiar with the situation.

JPMorgan ⁠went through its financing portfolio – name by name and then sector by sector – and put different marks on loans such as those with underlying software exposure, one of the sources said.

The re-marking does not happen often but this isn’t the first ​time the bank has re-marked loans, the first source told Reuters, adding the move was “important to do when markets warrant it rather than waiting for a crisis to come along.”

JPMorgan’s credit agreements for the private-credit space allow it to re-mark valuations based ​on the collateral of the fund if there is a market dislocation, the source said, adding the marks are not significant.

The move to mark down the value of certain loans to private credit players will reduce lending to the funds, Reuters reported, citing a source familiar with the matter.

MORGAN STANLEY

The Wall Street banking giant limited redemptions at one of its private credit funds after investors sought to withdraw almost 11% of shares outstanding, according to a regulatory filing.

Morgan Stanley’s North Haven Private Income Fund (PIF), which was invested in 312 borrowers across 44 industries as of January 31, returned ​roughly $169 million, or about 45.8% of investors’ tender request, for the quarter.

BLACKROCK

The world’s largest asset manager said on March 6 that it has restricted withdrawals from its flagship HPS Corporate Lending Fund (HLEND) after a jump in requests.

HLEND received $1.2 billion in withdrawal ​requests in the first quarter, equal to about 9.3% of its net asset value. The fund told investors it would distribute $620 million under its quarterly redemption program, reaching the 5% limit at which managers can curb further withdrawals.

Subscriptions to the fund were $840 million in the first ‌quarter, lower than ⁠the $1.2 billion that investors originally sought to withdraw. According to company documents, 19% of HLEND’s portfolio is tied up in software.

OAKTREE

A private credit fund owned by Oaktree Capital Management decided to honor the full 8.5% in redemption requests it received in the first quarter, according to a regulatory filing on March 27.

The fund will repurchase roughly 13.9 million, or 6.8% of the outstanding shares from investors in the Oaktree Strategic Credit Fund (OSC), while Oaktree’s parent Brookfield will purchase another 1.7% of shares to help meet 100% of the redemption requests.

BLACKSTONE

Alternative asset manager Blackstone said on March 2 that its flagship private-credit fund, BCRED, saw a sharp rise in withdrawal requests in the first quarter.

The company let clients pull a bigger-than-usual $3.7 billion from the $82 billion fund. Adding $2 billion of ​new commitments left net withdrawals at $1.7 billion.

The surge in requests led ​the fund to raise its usual 5% quarterly redemption ⁠cap to 7%, while Blackstone and its employees injected $400 million to meet all withdrawals.

APOLLO GLOBAL

Apollo Global’s $25 billion private credit fund said on March 23 it was capping redemptions at 5% of its shares after investors sought to withdraw roughly 11.2% of the total outstanding shares.

The fund said the decision to buy back less than investors requested was consistent with its objectives for liquidity, or ​the ability to meet its payment obligations without damaging the value of its assets.

The withdrawals leave the fund with about $730 million of gross outflows for the period, balancing out ​inflows of about $724 million.

The fund expects ⁠to return about 45% of the requested capital to each redeeming investor.

ARES

Ares Management’s -credit fund limited redemptions at 5% after investors sought to withdraw roughly 11.6% of the total outstanding shares, it disclosed in a regulatory filing on March 24.

The majority of the redemption requests were made by a limited number of family offices and smaller institutions that represent less than 1% of its over 20,000 shareholders, it said.

Ares Strategic Income Fund will return $524.5 million, or 5% of its outstanding shares.

KKR

KKR’s non-traded private credit fund limited redemptions at 5% ⁠of shares after ​requests for withdrawals surged in the first quarter, according to a letter to shareholders on March 31.

The fund, KKR FS Income Trust, received repurchase requests totaling ​roughly 6.3% of outstanding shares in the first three months of 2026, of which it plans to satisfy about 80%.

CLIFFWATER

Cliffwater LLC’s private-credit fund capped its share repurchases at 7% in the first quarter due to investor redemptions of around 14%, according to Bloomberg News.

As an interval fund, it is required to repurchase shares quarterly. It fixed the rate at 5%, with the option to buyback up to 7%, according to the report.

Dallas Federal Reserve President Lorie Logan said on Thursday that U.S. oil ​producers are unlikely to boost output and shield consumers from higher gasoline prices any time soon.

Stating that the price U.S. producers want to see in order to start drilling operations is slightly below $70 per barrel, which is well below the current price of approximately 10 per barrel, Logan said at a conference organized by the regional Fed bank: “Prices need to be maintained at or above this breakeven level so that companies can make the necessary investments, which could eventually provide relief for consumers.” Logan, stating that the price U.S. producers want to see to start drilling is just below $70 per barrel, which is well below the current price of about 10 per barrel, said at a conference held at a regional Fed bank: “Prices need to be sustained at or above this breakeven level so that firms can make the necessary investments, which could eventually provide relief for consumers.”

Logan said that U.S. oil companies “should have a sense that these high prices will continue for a while longer, and therefore, I haven’t heard that we will see a dramatic increase in production in the short term.”

Logan’s comments indicate that the rise in energy prices due to the US-Israel war with Iran will continue to be a short-term issue for inflation and overall economic activity, despite the US having buffer mechanisms that other countries closer to the conflict do not possess.

The Dallas Fed President stated that inflation continues to be one of the most important economic concerns. “Regarding inflation, even before the conflict in the Middle East, I wasn’t sure we would be moving toward our 2% target,” he said. “Restoring price stability, bringing inflation back to 2%, is incredibly important because stable inflation is the bedrock of a strong economy.” “Restoring price stability and bringing inflation back to 2% is incredibly important because stable inflation is the cornerstone of a strong economy.”

Repeating the monetary policy view of many of her colleagues, Logan said the current uncertainty means the Fed should watch and wait as it gathers information on the economy’s performance.

“I really enjoy thinking about events thru scenarios right now,” Logan said. “I think the policy is positioned to adjust based on incoming data, and we are ready to make adjustments to the policy path as needed. “I think the policy is positioned to adjust itself based on incoming data, and we are ready to make adjustments along the policy path when necessary.”

ENERGY PRICE WOES

Rising energy prices currently pose a significant challenge for the Fed. The US central bank had lowered interest rates by 0.75% last year to support the softening labor market amid still high price pressures.

The war is increasing the risk of further inflation, creating new problems for the job market and overall economic growth. As a result, the Fed, tasked by Congress with controlling inflation and promoting maximum sustainable job growth, faces a challenging balance.

The central bank traditionally ignores energy price increases because they temporarily affect overall price pressures and have a limited impact on core prices. However, St. Louis Fed President Alberto Musalem said in a statement on Wednesday that the current prolonged period of inflation above the target increases the risk of energy inflation becoming a longer-term economic problem.

In a note published by Capital Economics, it was stated that the “indirect” effect of higher energy prices on inflation could vary from 0.7% in the US to approximately 1.5 percentage points in the Eurozone, with the UK and Japan possibly falling somewhere in between.

The Personal Consumption Expenditures Price Index, the Fed’s preferred inflation gage, rose 2.8% in January and, more troublingly, 3.1% excluding food and energy costs.

Inflation fears have led to speculation in the markets that higher interest rates may be needed to counter rising inflation. The Fed left its benchmark overnight interest rate in the 3.50%-3.75% range at last month’s meeting and released projections showing policymakers expect a rate cut in 2026.

Logan said the war “increased our level of uncertainty about the economy and future outlook, making our jobs more complex because it increased the risks on both sides of our tasks.”

If the war is resolved quickly, he stated that its economic impact would probably be “moderate.” However, he also added that a longer-lasting war could have more “negative” effects, which could “move in opposite directions regarding our dual mission and cause significant tension between our responsibilities.”

On Thursday, Goldman Sachs announced the acquisition of Innovator Capital Management, a provider of active exchange-traded funds. This move expands the Wall Street bank’s footprint in the rapidly developing industry.

Active ETFs are gaining popularity among investors due to their low costs and customizable methods, while passive index products have lacked performance.

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In December, the bank announced the acquisition of Innovator Capital, which manages 171 ETFs with $31 billion in assets, for approximately $2 billion.

Goldman Sachs CEO David Solomon said, “With this acquisition, we have taken a transformative step in our commitment to providing advanced investment solutions designed to deliver specific outcomes for investors thru market cycles.”

Following the agreement, Innovator’s co-founders Bruce Bond and John Southard will join Goldman Sachs as advisory directors; Chief Investment Officer Graham Day and Head of Distribution Trevor Terrell will serve as partners.

Goldman Sachs stated that more than 70 Innovator employes will also join the company.

Goldman Sachs Asset Management currently manages approximately 240 ETFs worldwide, with total ETF assets reaching 90 billion dollars.

Innovator uses a strategy called defined outcome strategy, which employs exchange-traded options to protect investors from market downturns while limiting upside movement to help cover the cost of protection.

Graham Day told Reuters, “What we found is that many advisors have clients who are pre-retirement or in retirement.” “They’re prioritizing capital preservation over capital appreciation,” he said.

Day said that the current size of the defined outcome market is between 70 billion and 80 billion dollars and that it is growing faster than the traditional ETF space.

Goldman Sachs Asset Management Chief Transformation Officer Bryon Lake said, “Traditional correlations are breaking down. Therefore, more and more investors are looking for different ways to gain market exposure,” he said.

Tokyo – A senior official at the Bank of Japan said they would continue to raise interest rates if economic forecasts materialize. This statement reinforces the tightening trend despite new surveys showing that rising fuel costs linked to the Iran war are putting pressure on companies.

In his speech to parliament on Friday, Koji Nakamura, the Director of Monetary Policy at the Bank of Japan, stated that high oil prices not only pose a risk to economic growth but can also raise long-term inflation expectations and increase core inflation.

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Nakamura said that with companies becoming more willing to raise prices and wages, the core inflation pressure from oil could be greater than in the past.

Nakamura said, “If our economic and price projections materialize, we will likely continue to raise interest rates,” and added that the degree and timing of future increases would depend on economic, price, and financial conditions.

“At each policy meeting, we will make an appropriate decision by updating our economic and price projections and our views on risks based on the current data,” he added.

Nakamura’s comments emphasize that even as new pressures from outside Japan increase, the BOJ is ready to continue with moderate interest rate hikes. The rising fuel costs and more expensive imports due to the weak yen are increasing domestic inflation, making the central bank’s delicate balancing act more challenging.

This message came as the BOJ has been increasingly adopting a hawkish tone in recent weeks; this rhetoric has led the markets to price in a nearly 70% probability of another rate hike within this month.

However, the backdrop is quite tense. Japan’s heavy reliance on Middle Eastern fuel leaves its economy extremely vulnerable to energy shocks and supply disruptions caused by war.

These tensions are already reflected in the corporate sector. According to a survey published on Friday by the private think tank Teikoku Databank, business confidence sharply deteriorated in March; many sectors, from transportation and retail to machinery and chip production, are concerned about high fuel costs.

This is the first time since September 2023 that confidence has deteriorated across all 10 sectors covered in the online survey conducted between March 17-31, weeks after the US-Israel attacks on Iran on February 28. The yen has lost more than 2% against the dollar since the war began.

According to the survey, a fertilizer producer stated, “Rising crude oil prices are increasing a wide range of input costs, while the flow of goods is slowing down.”

A separate private survey published on Friday painted an equally bleak picture, showing that service sector growth has fallen to its lowest level in three months and confidence has dropped to its weakest level since the 2020 pandemic.

While Bank of Japan (BOJ) officials warn that the war has the potential to fuel inflation, other analysts believe that the anticipated shortage of naphtha and other chemical goods could represent a greater threat and destabilize the already shaky economy. The central bank may provide further detail on how it considers these conflicting risks in its quarterly regional report, which will be released on Monday.

The BOJ stopped its decade-long major stimulus program in 2024 and raised interest rates numerous times, with the short-term policy rate reaching 0.75% in December, the highest level in 30 years.

Chairman Kazuo Ueda declared unequivocally that as long as a modest economic recovery keeps inflation within the bank’s 2% target, the door to interest rate hikes remains open.

Blue Owl (OWL.N) informed investors on Thursday that it had limited withdrawals from two of its funds following record-level redemption requests in the first quarter. Concerns related to artificial intelligence led to investors exiting the technology-focused fund.

Private credit companies like Blue Owl are feeling the pressure from the recent market downturn, leading some investors to pull back from these investments due to concerns about valuations and credit standards following several high-profile bankruptcies. Founded in 2021, Blue Owl has become a symbol of private credit funds struggling with high redemption rates.

Anxious investors are indiscriminately selling everything with heavy exposure to the software sector due to the threat posed by developments in artificial intelligence to disrupt all sectors of the economy. The company had previously stated that about 8% of its approximately $300 billion in assets was invested in software.

According to various calculations, Blue Owl investors were asked to withdraw $5.4 billion in shares between two funds in the first quarter.

This is the latest example added to the growing list of firms like KKR, Apollo, and BlackRock that have restricted buybacks in recent weeks.

Thursday’s news brought Blue Owl shares down to an all-time low in midday trading. The stock has been losing value for months and has lost nearly half of its market value since the beginning of 2026.

Shares of other private equity managers, including Ares (ARES.N), Apollo Global (APO.N), Blackstone (BX.N), and Carlyle (CG.O), also fell.

UNPRECEDENTED WITHDRAWALS

Investors asked to withdraw 40.7% of shares in the $6.2 billion technology-focused Blue Owl Technology Income Corp (OTIC) fund, and 21.9% of shares in the $36 billion Blue Owl Credit Income Corp (OCIC) fund, according to preliminary data released by the company. Those percentages rank among the highest quarterly redemption requests the industry has ever seen, ​a person familiar with the matter said.

The firm said it plans to only fill 5% of the requests, saying there was a “meaningful disconnect” between public sentiment on private credit ​funds and the underlying performance of its portfolio.

“It’s another reminder about how illiquid this sector is,” said Sam Stovall, chief investment strategist of CFRA Research in New York. He said retail investors thinking ‌about investing ⁠in private equity may want to think twice. “It is a sector that is meant for professionals.

“Don’t try this at home. Private credit does not have the kind of liquidity that public markets would have and it’s very difficult to get the money out as quickly as you might want it,” Stovall said.

The funds, structured as what are known as business development companies (BDCs), raise equity and pair it with leverage to finance loans, mainly to mid-sized companies. Some of them trade on public markets, where investors can buy and sell shares. Non-traded funds like Blue ​Owl’s give investors quarterly opportunities to withdraw ​a portion of their holdings, which ⁠is usually capped at 5% of shares.

PAST REDEMPTION LIMITS

In the last quarter, Blue Owl preferred to allow OTIC shareholders to repurchase 15.4% of their shares.

The CEO of the funds, Craig Packer, said in two updates to shareholders, “In the first quarter of 2026, there was an increase in bidding activities in the non-public BDC sector; this reflects a period of heightened negative sentiment toward the asset class, intensified by peers announcing bidding results.”

Blue Owl stated that the decline in the software sector has created opportunities to add to its portfolio.

Markets had reacted to some of Blue Owl’s previous plans regarding its BDCs, particularly the proposal to merge a publicly traded vehicle with a private version last year and to finance payments by selling assets instead of quarterly buybacks.

The concentration of redemption requests among a small number of investors (1% of OCIC shareholders, who account for the majority of redemption requests) suggests that this exit is driven more by institutional investors or asset management clients rather than widespread retail panic.

Blue Owl stated that negative sentiment is more severe in technology funds with a smaller shareholder base and greater exposure to the software sector.

The company said, “Increasing market concerns regarding software companies related to artificial intelligence have significantly affected investors’ perceptions of software-related credit risks.”