Tension is rising in the United States in the world of private funds, particularly in private credit and private equity, two pillars of the alternative financial industry that have experienced rapid growth over the past fifteen years. This is a financial universe that in recent years has progressively replaced banks in financing companies, especially medium-sized firms, and often operates in close synergy: private equity funds acquire companies while private credit funds finance their expansion.
The latest sign of stress comes from BlackRock, the world’s largest asset manager, which has decided to limit redemptions in one of its main private credit funds. According to reports from the Financial Times and Reuters, redemption requests reached 9.3% of the fund’s net asset value, while the manager authorized redemptions only up to 5% of the assets, the limit set for these semi-liquid vehicles.
The $26 billion HPS Corporate Lending Fund received redemption requests amounting to about $1.2 billion in the first quarter, that is 9.3% of the net asset value. BlackRock approved only part of the redemptions, about $620 million, thus reaching the 5% limit that allows managers to block further outflows. The decision comes at a time when investor distrust towards private credit is growing, a sector that in recent years had attracted hundreds of billions of dollars promising high returns compared to traditional bond markets.
The BlackRock case is not isolated. At the same time, other major players in the sector are facing similar pressures. A few days earlier, alternative investment giant Blackstone had recorded a wave of redemption requests in its private credit fund BCRED, the largest in the sector with about $82 billion in assets. According to Sole 24 Ore, redemption requests reached about $3.8 billion, equal to 7.9% of the fund’s assets, and were all met by the manager. To meet all requests, Blackstone and some of its executives also decided to invest directly about $400 million in the vehicle.
The phenomenon is not limited to these two giants. In recent months, several private credit funds have had to limit or suspend redemptions. Among the most cited cases is Blue Owl, which blocked redemptions from one of its funds, further fueling investor fears. This is a significant signal because these instruments, often defined as “semi-liquid,” allow investors to request periodic redemption of shares while investing in long-term loans that are difficult to trade. This imbalance between liquidity promised to investors and the illiquid nature of the assets is at the heart of market concerns today. As BlackRock explained to investors in a letter cited by the Financial Times, the redemption limit is “fundamental” to avoid “a structural mismatch between investor capital and the duration of loans held by the fund.”
Tensions arise in a sector that has become gigantic. The private credit market in the United States is now worth about $1.8 trillion, while the private equity market holds stakes in companies with a total value of about $4 trillion.
Globally, the private credit sector has now reached about $2 trillion after very rapid growth in the last decade, fueled by the massive entry of institutional and private capital into alternative funds.
This interconnection is today one of the main sources of risk. As Sole 24 Ore points out, in the years of very low interest rates many funds financed aggressive acquisitions by granting loans with reduced guarantees just to win the deals. When the cost of money was near zero and liquidity abundant, the model worked: companies acquired by funds could grow, refinance debt, and generate high returns for investors. But with the economic slowdown and changing financial conditions, some of these operations are showing the first cracks. Not to mention the disruptive impact of artificial intelligence and new software.
An example comes from the technology and software sector, one of the main recipients of fund capital in recent years. Several loans linked to private equity operations have been written down, as in the case of software company Medallia, whose value was revised downward to the point that much of the equity invested by funds was lost. Listed credit funds have also recorded significant losses on loans granted to companies financed by buyouts, a sign of growing fragility in the system.
The picture has also been complicated by some corporate bankruptcies that have shaken the private credit market. Over the past year, the default of two suppliers in the U.S. automotive sector has raised questions about the quality of risk analyses conducted by funds that had granted the loans. These episodes have helped accelerate redemption requests from investors. According to Reuters, the deterioration in sentiment was fueled precisely by some funds’ exposure to the failure of an auto parts supplier and a subprime lender for the automotive sector.
The macroeconomic context also plays an important role. The Federal Reserve’s decision to start cutting interest rates last year reduced the attractiveness of returns offered by private credit funds, which in previous years had benefited precisely from the rise in the cost of money. Some funds had to reduce dividends distributed to investors, further fueling the climate of caution.
Meanwhile, geopolitical uncertainty and market tensions are pushing many investors to shift towards assets considered safer. Volatility linked to international conflicts and fears of economic slowdown are favoring a rotation towards so-called safe-haven assets, reducing appetite for investments perceived as riskier or less liquid. Reuters highlights that many investors are moving capital precisely towards defensive assets as volatility grows in global markets.
Concerns are not confined to private markets but are beginning to reflect in the stock market as well. Several analysts highlight how the financial sector is among the worst performers in the S&P 500 since the beginning of 2026, with a decline exceeding 9%. Companies most exposed to private credit, including Ares Management, Blackstone, Apollo, and KKR, have recorded even sharper declines, with losses exceeding 20% year-to-date.
KKR is one of the groups most closely watched by the market. The fund has recorded write-downs on some loans in the private credit sector, while its listed vehicles have faced strong pressure in the stock market. The issue also concerns Italy: KKR is indeed the fund controlling Fibercop with a 37.8% stake, a deal that remains at the center of economic and political debate, as reported by Startmag in recent days.
For many analysts, the current situation represents a sort of reckoning after more than a decade of almost uninterrupted growth in private markets. During the years of very low rates, funds raised enormous amounts of capital and were pushed to invest ever more quickly, often paying very high valuations for acquisitions in sectors such as software, services, and medium-sized enterprises. Now that the financial cycle has changed, some of these operations are showing their limits.
