Investors pull billions from private credit funds as redemption caps expose liquidity illusion

Investors requested $5.4 billion in redemptions from Blue Owl's OCIC and OTIC funds in Q1 2026, totaling 21.9% and 40.7% of shares respectively. Blue Owl capped withdrawals at 5% per quarter, limiting investor access to capital despite high demand for exits.

Apollo Global Management received redemption requests for 11.2% of its $25-billion Debt Solutions BDC but honored only 5%, fulfilling about 45% of requests. Ares Management received requests to redeem 11.6% of its $22-billion Strategic Income Fund and fulfilled 5%, or $525 million, meeting 43.1% of demand. BlackRock faced $1.2 billion in withdrawal requests from its $26-billion HPS Corporate Lending Fund and paid out $620 million, adhering to its 5% quarterly cap.

Morgan Stanley capped redemptions at 5% of its $8-billion North Haven Private Income Fund, fulfilling $169 million or 45.8% of the 10.9% requested. Cliffwater LLC honored 7% of shares in its $33-billion Corporate Lending Fund, meeting about half of redemption requests, citing a 'regulatory maximum.' Blackstone raised its redemption limit to 7% from 5% for its $82-billion BCRED fund after 7.9% of investors requested exits, allowing $3.7 billion in withdrawals with $400 million in internal capital support.

Moody’s downgraded the outlook on Blue Owl’s OCIC fund to 'negative' and revised its entire U.S. BDC sector outlook to 'negative' due to elevated redemption pressures. Private credit funds, while marketed as income-generating investments, operate with structural liquidity mismatches—underlying assets are illiquid, but investors are promised quarterly access to capital.