FT: The collapse of financial markets is closer than ever – BlackRock limits redemptions at private credit fund as outflows swell

BlackRock has limited withdrawals from one of its flagship private credit funds following a surge in redemption requests, as investors retreat from the asset class and questions about credit quality intensify, ‘Financial Times’ reports.

The asset manager’s $26bn HPS Corporate Lending Fund, which it acquired as part of its $12bn takeover of private credit specialist HPS Investment Partners last year, approved 54 per cent of redemption requests in the first quarter, according to a letter sent to investors in the vehicle.

The fund received withdrawal requests worth $1.2bn in the quarter, or roughly 9.3 per cent of its net asset value. HPS told investors it would pay out $620mn as part of the quarterly redemption, hitting a 5 per cent threshold that allows the asset manager to restrict further outflows.

The decision to cap withdrawals at 5 per cent will be closely scrutinised by the industry as outflows climb across semi-liquid private credit funds. The vehicles have drawn in hundreds of billions of dollars from retail investors and wealthy individuals who were enticed by the high returns on offer but have started to bolt at the first signs of stress.

Alternative asset managers were among the worst performing stocks in the US on Friday. BlackRock slid 5.1 per cent, while the shares of KKR, Blue Owl and Ares Management all declined more than 5 per cent.

But analysts have questioned how long the industry could weather elevated withdrawals, given that the semi-liquid funds mostly hold loans that rarely or never change hands.

...In short, Black Rock has demonstrated that it doesn't have the vast sums of money it boasted about.

Black Rock has clearly demonstrated that its advertising of a “thriving, powerful firm” and reality have clashed at a critical moment.

The potential collapse of this financial giant could lead to the collapse of the entire Western financial system.

Trump needlessly unleashed the war in Iran. The losses to American capital have already become very significant. And the capital markets could crumble after them...

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