black stone is restricting withdrawals from its flagship Blackstone Private Credit fund, or BCRED, following a surge in redemption requests from investors, as fears over liquidity pressures have roiled private markets.
The asset management giant capped investor withdrawals from the $79 billion non-traded business development company at 5% of shares, after redemption requests reached 10% during the second quarter.
It comes after American Private Markets Giants sold off on Wednesday after Switzerland Partner Group said it was limit redemption requests in one of its European private equity vehicles.
Partners Group said on Thursday it was prepared to restrict withdrawals from more of its funds, warning that the rise in client withdrawals now extends from private credit to private equity.
Shares of Blackstone were up more than 5% late Thursday morning. They fell about 4% on Wednesday during the sell-off.
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BCRED is one of the first large semi-liquid private credit vehicles to be informed of investor redemption requests during the second quarter.
The cap comes after BCRED saw customer redemption requests climb to a record 7.9%, or about $3.8 billion, in the first quarter.
Blackstone met 100% of these requests by increasing its quarterly cap and using employee capital to cover the remaining amount.
The fund attracted inflows of about $1 billion during the first quarter, but ultimately saw a net outflow after covering withdrawals.
“The idea that there are caps is actually a feature, not a bug, of these products,” said Blackstone’s COO and president. Jon Gray told CNBC in March.
As Partners Group released its update on Thursday, its CEO David Layton said: “Liquidity features are designed to protect long-term investors and to ensure that returns continue to be determined by the quality of the underlying private assets rather than short-term flow dynamics. »
Last week, Daniel Ivascyn, Pimco’s chief investment officer, warned that deeper losses would soon hit the credit sector.
“There’s a lot going on beneath the surface,” he said in a video shared by the company. “We believe we are in the middle of the first sustained default or loss cycle in many, many years.”
—CNBC Leslie Picker contributed to this story.
