In yet another indication that investors and their financial advisors have lost their appetite for high-risk, high-yield private loan funds, the Blackstone Private Credit Fund, with $82 billion in assets, said on Monday it saw in the first quarter of 2026 a surge in clients looking to sell their shares back to the nontraded business development company.
In a filing with the Securities and Exchange Commission, Blackstone Private Credit Fund, commonly known as BCRED, said clients had redeemed close to $3.7 billion in the fund’s shares during the first two months of the year. That represents 7% of the fund's shares being sold back, above the typical maximum of 5% the fund allows.
BCRED is a nontraded business development company, meaning its shares are not listed on an exchange and resulting in limited liquidity for investors.
“Some of these BDC funds are so big, and that can be a problem,” said one senior industry executive who spoke privately to InvestmentNews. “These BDCs are deploying capital into similar or even the same companies’ private debt. So when one fund hits a snag, they can all take a hit.”
Nontraded BDCs and real estate investment trusts are popular alternative investments sold by advisors to clients seeking yield; such investments are tested when skittish retail customers react to market news and want out.
Financial advisors’ sales of nontraded BDCs, which invest in private credit, have tanked in the past couple of months as the private loan market faces questions about lending to software companies and high-profile bankruptcies in 2025.
BCRED also reported $2 billion of new sales for the first quarter, which means its net withdrawals are $1.7 billion. Blackstone and its employees also invested $400 million into the fund to allow all redemption requests to be met.
“BCRED is fulfilling 100% of repurchase requests and continues to deliver strong performance for its investors, with a 9.8% annualized total return since inception for Class I shares, a 360 basis points premium to leveraged loans,” a Blackstone spokesperson said.
Traded and nontraded BDCs are funds that act like mini-banks and finance the loans of mid-sized private companies. They have exploded in popularity since the 2008 credit crisis, with the restriction placed on banks opening up the market.
But investors have woken up to worries about BDCs' exposure to loans to private software companies, which are under pressure because of the potential for artificial intelligence to wipe them off the map.
And recent high-profile bankruptcies have also spooked financial advisors’ clients, resulting in a surge in clients cashing out of nontraded BDCs by selling back billions of dollars of shares to the investment funds in the final months of last year.
The latest cause for concern has been a series of recent moves by prominent BDC manager Blue Owl Capital Inc., which trades with the ticker OWL.
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