Cliffwater’s flagship private credit fund has once again limited quarterly redemptions to 5% after investors sought to withdraw around 16% of their holdings, underscoring continued liquidity pressures across the private credit market, according to a report by Bloomberg.
The $31bn Cliffwater Corporate Lending Fund told shareholders that they will receive approximately one-third of the amount requested during the third quarter, according to an investor letter.
The latest redemption demand was broadly consistent with the previous quarter, when investors sought to redeem approximately 17% of the fund.
Cliffwater said investors who have requested withdrawals since the first quarter have so far received around 78% of the capital they sought to redeem.
Stephen Nesbitt, Cliffwater’s chief executive, said the firm remained confident in the underlying resilience of private credit despite the elevated redemption activity.
The fund has generated an annualised return of 9.23% since its launch in 2019, Nesbitt said, putting its performance ahead of leveraged loans and investment-grade bonds over the same period.
The Cliffwater fund is the largest interval fund in the roughly $1.8tn private credit market and has become an important gauge of investor liquidity demands in the direct lending sector.
The vehicle has expanded rapidly in recent years, deploying capital across direct loans and other private credit funds as Cliffwater established itself as a significant player in the asset class.
Redemption pressure intensified earlier this year. Investors sought to withdraw approximately 14% of their holdings in the first quarter, with the fund initially allowing withdrawals equivalent to 7% of shares outstanding.
Cliffwater subsequently reduced the quarterly redemption limit to 5%, bringing its payout threshold more closely into line with other non-traded private credit vehicles.
