BlackRock, the world’s largest asset manager, said on March 6 that it has restricted withdrawals from a major debt fund amid a wave of client redemption requests.
Investors have been seeking to recover their funds from BlackRock’s $26 billion Corporate Lending Fund.
This investment vehicle extends direct loans to private mid- and large‑sized companies and offers investors higher yields than conventional corporate bonds and Treasury securities.
Shares of BlackRock fell more than 7 percent on March 6 to around $955 a share, registering a weekly loss of 8.2 percent.
Over the past several months, mounting concerns surrounding liquidity and lending standards have plagued the $2 trillion private credit market.
While the non-bank lending sector has typically been reserved for wealthy individuals and firms, it has opened to retail investors. But uncertainty in the industry is causing anxiety.
BlackRock’s industry competitors have witnessed similar investor trends.
Redemption requests totaled close to 8 percent, prompting the company to raise its withdrawal cap to 7 percent from its usual 5 percent.
Blackstone also said it deposited $400 million into the fund to ensure all redemptions were honored.
Jitters about the health of the direct-lending industry started in September after the bankruptcies of a U.S. auto parts supplier and a subprime auto lender.
Fears were exacerbated following last week’s collapse of the British Market Financial Solutions.
Private credit defaults reached a new high of 9.2 percent in 2025, up from 8.1 percent in 2024, according to Fitch Ratings.
Despite the uptick, losses were limited, researchers noted.
“In 2025, six of eight cases with ultimate recoveries resulted in par paydowns for lenders,” Fitch said in a March 6 report. “In the other two cases, lenders likely took modest haircuts, with recoveries still estimated at 70 percent to 90 percent.”
Stocks of private credit firms joined the broader market selloff at the end of the trading week.
Verdict Is Out
Whether this is the beginning of something comparable to the events leading up to the global financial crisis two decades ago has been open for debate.
In a March 6 Bloomberg Television interview, Federal Reserve Governor Christopher Waller dismissed worries that this is a structural issue.
“I don’t see big—really big—widespread problems in the private credit market,” Waller stated.
“I don’t think as a whole the private credit market is in any serious trouble, but you’re going to have these things popping up here and there.”
Still, it might not be big enough to threaten the nation’s financial stability, he added.
Pacific Investment Management Co. strategists believe private credit will eventually “face a full‑blown default cycle” once it experiences a stress test, citing looser underwriting standards.
“Persistent opacity and weak disclosure around issuer fundamentals are therefore likely to keep concerns about credit quality and portfolio price marks firmly in focus,” they said in a March 6 research note.
Moving forward, it might not be the industry but rather how private credit weathers turbulence, says Bank of Canada Governor Tiff Macklem.
“It’s hard to connect the dots across the system—both within the private credit sector and between private credit and the rest of the system,” Macklem said in a speech at a Global Risk Institute event on March 4.
“The opacity of private credit means investors may not have enough information about the quality of loans held in their funds.”
Others believe conditions for direct-lending investments are resilient.
In a March 3 interview with CNBC, Jon Gray, president of Blackstone, attributed the prevalence of redemption requests to “noise” in financial markets and the media.
“We’ve had a ton of noise. As you guys know better than anybody in the press, this has become a story,” Gray said.
“There’s a constant spin cycle, and so when that’s happening, it’s not a surprise that investors can get nervous. Financial advisers can say, ‘Hey, I want to redeem.’”