Pressure in private credit is radiating through Wall Street, forcing both banks and private-credit managers to change how they value, finance and provide liquidity to the sector. Market participants point to valuation and transparency concerns, along with instances of borrower distress, as drivers of heightened caution that has yielded loan re-markings, redemption limits and asset sales.
Sentiment toward the segment has been weakened by questions over how assets are being valued and by a lack of full transparency into exposures, plus concrete examples of borrower failures. The bankruptcies of auto-parts supplier First Brands and of car-dealership operator Tricolor - in which some private-credit lenders had exposure - have underscored those worries. At the same time, investors and intermediaries are scrutinizing portfolios with higher concentrations of software businesses, where valuation dynamics have been particularly unsettled.
Moody's data show U.S. banks had almost $300 billion in loans outstanding to private-credit providers as of June 2025. Those same banks had lent a further $285 billion to private-equity funds and maintained about $340 billion in unused lending commitments to those borrowers. Those linkages create a channel by which stresses in private-credit vehicles can affect broader banking relationships and financing activity.
Alternative asset managers have also felt the strain as investor concern grows over the valuations of software companies they own or finance. Rapid advancements in artificial intelligence are mentioned as a factor that could disrupt entrenched business models for some software firms, contributing to uncertainty over asset values and making investors more cautious about committing capital to private credit backed by such assets.
What some major banks and funds have done recently
Below are recent measures taken by several of Wall Street's largest banks and by prominent private-credit funds in response to the market environment.
JPMorgan Chase
The largest U.S. bank reduced the value it assigned to certain loans made to private-credit funds after reviewing the implications of market turbulence related to software companies, according to people familiar with the matter. Bank personnel assessed their financing portfolio on a name-by-name, sector-by-sector basis and applied different valuation marks to loans tied to underlying software exposure.
Sources note that such re-marking is not an everyday occurrence, though it has happened previously, and said it was "important to do when markets warrant it rather than waiting for a crisis to come along." JPMorgan's credit agreements in the private-credit space permit it to re-mark valuations based on fund collateral in the event of market dislocation, and a source said that the marks applied were not significant.
That decision to lower marks on a subset of loans is expected to reduce the level of financing the bank provides to private-credit funds, according to a source familiar with the situation.
Morgan Stanley
Morgan Stanley limited redemptions at its North Haven Private Income Fund (PIF) after investor demand to withdraw approached 11% of shares outstanding, as disclosed in a regulatory filing. As of January 31, the fund was invested across 312 borrowers in 44 industries. For the quarter, the fund returned roughly $169 million, equating to about 45.8% of the tender requests received.
In a letter to investors, Morgan Stanley's private-credit arm said the direct-lending industry has faced a set of challenges including uncertainty about the recovery in mergers and acquisitions activity, a compression of asset yields and heightened speculation regarding credit deterioration. The manager stated: "By maintaining appropriate limits on the quarterly repurchase offer, the company seeks to avoid asset sales during periods of market dislocation."
BlackRock
BlackRock restricted withdrawals from its HPS Corporate Lending Fund (HLEND) after the vehicle saw a surge in requests. In the first quarter, HLEND received $1.2 billion in redemption demands, representing approximately 9.3% of its net asset value. Under the fund's quarterly redemption program, it distributed $620 million, reaching the 5% threshold at which managers may curb further withdrawals.
HLEND told investors the 5% cap is intended to prevent "a structural mismatch between investor capital and the expected duration of the private credit loans in which HLEND invests." Subscriptions to HLEND totaled $840 million in the quarter, lower than the $1.2 billion investors initially sought to pull. Company documents indicate 19% of HLEND's portfolio is invested in software.
Apollo Global
Apollo Global's $25 billion private-credit fund capped redemptions at 5% of shares on March 23 after investors sought to withdraw roughly 11.2% of the fund's outstanding shares. The fund's statement said the decision to fulfill less than the full redemption requests was consistent with its stated liquidity objectives and its goal of being able to meet payment obligations without damaging asset values.
Net flows for the period left the fund with about $730 million of gross outflows, which was offset by approximately $724 million of inflows. The manager said it expected to return roughly 45% of the requested capital to each investor seeking to redeem.
Blackstone
Blackstone's BCRED flagship private-credit fund experienced a sharp increase in redemption requests during the first quarter. The company allowed clients to withdraw $3.7 billion from the $82 billion fund. With $2 billion of new commitments, net withdrawals were $1.7 billion. In response to the surge, the fund raised its customary 5% quarterly redemption cap to 7% and Blackstone, together with employees, injected $400 million to meet those requests.
JPMorgan analysts observed that this marked the first quarter of outflows at BCRED, which is the largest fund of its kind that does not trade on a public market.
Blue Owl
Blue Owl Capital announced it was selling $1.4 billion of assets from three of its credit funds to return capital to investors and to reduce debt, and that it was permanently halting redemptions at one of the funds. The debt being sold spans 128 portfolio companies operating across 27 industries, with the largest concentration - 13% - in the software and services sector.
The loans being disposed of are held across three credit vehicles: $600 million in Blue Owl Capital Corp II, $400 million in Blue Owl Technology Income Corp, and $400 million in Blue Owl Capital Corp. Blue Owl's co-president Craig Packer said: "We’re not halting redemptions, we are simply changing the method by which we’re providing redemptions."
Cliffwater
Investors in Cliffwater LLC's flagship private-credit fund sought to redeem about 14% of shares in the first quarter, prompting the firm to cap repurchases at 7%, according to a report. As an interval fund, Cliffwater is required to repurchase shares quarterly. The firm set the standard repurchase rate at 5%, with discretion to repurchase as much as 7%.
Broader implications and current posture
Across these examples, common themes emerge: managers are deploying contractual liquidity tools such as redemption caps and altering repurchase mechanics; some are selling assets to raise capital; and lenders are re-evaluating the marks on loans to private-credit vehicles. The actions reflect a deliberate attempt to manage liquidity and valuation risk rather than to exacerbate dislocations through forced sales.
Several large private-credit managers - including firms that manage funds at Ares Management, Oaktree and Goldman Sachs - had not yet provided updates to investors on the results of first-quarter tender offers at the time of the reports. The evolving responses from lenders and managers will be watched closely for signs of wider contagion or stabilization.
Market participants and investors remain focused on concentrations within private-credit portfolios - notably software exposures - and on the mechanics by which funds meet redemption requests without impairing remaining investors. The interlinkages between banks' financing to private-credit and private-equity vehicles, as highlighted in Moody's data, are central to assessing how stresses in one corner of the market may transmit to broader credit provision.