Wealthy investors attempted to withdraw more than $20bn from private credit funds in the first quarter of 2026, highlighting growing pressures on an asset class that has become a major source of capital for leveraged buyouts and PE-backed companies, according to a report by the Financial Times.
The redemption requests, which affected large managers including Apollo Global Management, Ares Management, Blackstone, Blue Owl and KKR, totalled $20.8bn. Funds collectively managing approximately $300bn have honoured just over half of the requests, with some investors waiting for the next redemption window.
The withdrawals reflect heightened investor concern over private credit exposure to software companies backed by private equity, many of which face uncertainty amid rapid AI-driven disruption. The trend also underscores broader anxiety around ageing LBOs that remain difficult to exit, often financed through private credit channels.
Managers have responded in different ways: some, including Blackstone and Oaktree, have allowed redemptions to exceed standard 5% quarterly caps, while others – such as Apollo, Ares, Blue Owl, HPS Investment Partners, and Morgan Stanley – have maintained limits to protect remaining investors and avoid fire sales. Industry executives note that underlying loan performance remains largely stable despite the outflows.
Despite the pullback, many private credit funds continue to grow, supported by inflows into interval funds and non-traded business development companies. RA Stanger estimates the industry raised $3.5bn in such vehicles in the first two months of 2026 alone.
The spike in redemptions has drawn regulatory attention. The Federal Reserve and Treasury Department are monitoring the sector, while credit rating agency Moody’s downgraded the industry outlook, citing “increased redemption pressures.” Meanwhile, market watchers warn that defaults could rise if macro conditions worsen, given private credit’s concentration in higher-risk software and tech-backed deals.
