Blackstone·Cliffwater private loan fund redemption limit re-limited to 5%

(Seoul=Yonhap News) Reporter Jeong Ju-ho = Major private credit funds from Blackstone and Cliffwater have once again capped redemption limits at 5%, Bloomberg News reported on the 3rd (local time).

This reconfirms the liquidity pressure facing the $1.8 trillion private credit market.

Blackstone's $77 billion private credit fund (BCRED) disclosed that after investors requested redemptions equal to 10% of its shares, it decided to pay out only half, or 5%, for two consecutive quarters.

Its net asset value (NAV) dropped from $24.68 at the end of January to $23.64 at the end of July.

In a letter to shareholders, Blackstone stated that "the fund remains well-capitalized," noting that its annualized return since inception stands at 9%, outperforming leveraged loans by about 3 percentage points.

Earlier at the beginning of the year, top Blackstone executives were reported to have injected their personal funds to meet redemption demand.

Meanwhile, Cliffwater's $31 billion corporate lending fund (CCLFX) also limited redemptions to 5%, even though investors requested redemptions amounting to 16% of its shares.

After setting the limit at 7% when 14% was requested in the first quarter, the fund subsequently lowered it to 5% like other funds, and maintained that same level this time as well.

Stephen Nesbitt, CEO of Cliffwater, said, "We remain optimistic about the resilience of private credit," adding that the fund has achieved an annualized return of 9.23% since inception.

Private credit has maintained a defensive tone throughout this year due to investor concerns over underwriting standards and exposure to specific companies.

The industry-wide queue for redemptions has reached approximately $15 billion, while new capital inflows have plummeted by about 82% this year, sounding alarms over securing demand.