Source: Wall Street Insights
Original Title: Don't Just Focus on Iran, the US Private Credit Crisis is Step by Step Repeating the 'Subprime Crisis'
While market attention is focused on geopolitical risks, a quietly spreading private credit crisis is accelerating within the US financial system. Redemption waves, asset sell-offs, fund gating—this script, investors have seen it in 2008.
This week, the world's largest asset management company, BlackRock, announced restrictions on investor redemptions from its $26 billion HPS Corporate Lending Fund (HLEND), becoming the most impactful signal to date.
Previously, Blackstone's private credit fund faced a record 7.9% redemption request, and Blue Owl's stock price fell below its SPAC IPO price.
Three private credit giants sounding alarms in succession—the gears of a vicious cycle have already engaged.
Simultaneously, Pacific Investment Management Company (PIMCO) warned in its latest client report: the direct lending industry is about to face a "full default cycle," and stress testing is inevitable. This judgment comes from a long-time critic of private credit, and its weight cannot be ignored.
The spread of the private credit crisis is directly reflected in the stock price trends of related listed companies. Blue Owl's stock price fell below its SPAC issuance price, while private credit-related businesses of institutions like Blackstone and BlackRock face valuation pressure. The entire industry is undergoing a systemic reassessment of investor confidence.
01 Gating: BlackRock "Restricts Redemptions" for Its Private Credit Fund
According to a Wall Street Insights article, BlackRock stated in a declaration on Friday that shareholders of its HPS Corporate Lending Fund (HLEND) applied to redeem 9.3% of the shares this time, but the fund's management decided to set the repurchase上限 at 5%, approximately $12 billion.
BlackRock characterized this move in the statement as a "fundamental" arrangement for fund liquidity management, stating that without restrictions, a "structural mismatch" between investor capital and the duration of private credit loans would occur.
This wording sounds calm, but the market understood its implication: if redemptions were fully paid, BlackRock would be forced to initiate large-scale asset sales.
Previously, another private credit division under BlackRock had shown alarming signals—BlackRock TCP Capital Corp. reported in its Q4 report that it wrote down a $25 million loan to Infinite Commerce Holdings directly to zero from 100 cents, whereas just three months prior, the loan was marked at par value. From 100 to 0, three months, without warning.
02 Spreading Fire: The Vicious Cycle Triggered by Sell-offs
BlackRock's gating is not an isolated event, but the end point—or rather, a new starting point—of a fuse that has already been lit.
Three weeks ago, Blue Owl Capital took action first.
Faced with substantial redemption requests (primarily due to its highly concentrated exposure to software loans, which are rapidly depreciating under the impact of AI), Blue Owl announced the sale of $1.4 billion in private credit loans, effectively freezing investor funds by substituting asset sales for restoring the quarterly redemption mechanism.
The company emphasized that the assets slated for sale were all of the highest internal risk rating (Tier 1 or 2 on a five-tier system).
However, this strategy of "selling the best assets first" is precisely an accelerator for the crisis spread. If secondary market buying interest exists only for high-quality assets, the sale of investment portfolios from other Business Development Companies (BDCs) will face even thinner liquidity. It is reported that NMFC has indicated it is advancing the sale of approximately $500 million of its investment portfolio (17% of its total investments as of Q3 2025).
Blackstone's situation is equally severe. Its private credit fund BCRED manages $82 billion, and redemption requests this quarter reached a record 7.9%, exceeding the statutory上限 of 7%. To avoid triggering the gating mechanism, Blackstone employees were required to personally subscribe to $150 million to fill the gap.
Three institutions, three responses, but the same logic: gating or de facto gating to avoid forced sales triggering a greater valuation collapse. Analysis points out that the problem is, BlackRock's gating decision itself has sent the strongest panic signal to the market, potentially triggering more investors to rush for redemptions.
03 Blue Owl: Stock Price Falls Below IPO Price, Risk Exposure Continues to be Revealed
As the "epicenter" of this crisis, Blue Owl Capital's situation continues to deteriorate. Its stock price fell below the $10 SPAC IPO price this week, hitting a three-year low.
According to Bloomberg citing informed sources, Blue Owl holds a £36 million (approximately $48 million) exposure to London property lender Century Capital Partners Ltd.—a risk exposure it indirectly acquired through the acquisition of Atalaya Capital Management in 2024.
Century applied for administration last month, with total liabilities of about £95 million; NatWest Group and Hampshire Trust Bank are its priority creditors.
Blue Owl holds the riskiest junior tranche in Century's loan portfolio. Century's administrator, RSM UK, expects to fully recover the senior loans, but the fate of the junior tranche is another matter.
This event reveals another side of the private credit expansion period: asset-backed financing was once seen by industry leaders as a new frontier for growth, with executives from Pimco, Carlyle Group, Marathon, and Blackstone publicly optimistic about this track. Now, the risks of this track are emerging in unexpected ways.
04 PIMCO Warning: A Full Default Cycle is on the Way
Just as the private credit market was filled with alarm, PIMCO analysts Lotfi Karoui and Gabriel Cazaubieilh issued the most direct warning to date in their latest client report. The two analysts wrote in the report:
"Like every mature segment of the leveraged finance market, direct lending will eventually face a full default cycle—a cycle that will test its resilience to both industry-specific shocks and macroeconomic shocks."
PIMCO is one of the early critics of private credit. While direct lending strategies saw soaring fundraising规模, this institution managing approximately $2.3 trillion in assets chose to position contrarily, actively seeking potential problems among private credit-backed companies.
PIMCO's analysis pointed out several core risks:
First, record fundraising规模 post the 2008 financial crisis led to持续松弛 underwriting standards;
Second, the high concentration of direct loan portfolios in the software industry will drag down relative performance under AI impact;
Third, direct loan funds have long failed to provide sufficient risk premium compensation for investors' liquidity lock-up.
Regarding the liquidity困境 faced by BDC investors, PIMCO's wording was equally blunt: "Semi-liquidity does not equal full liquidity. Investors must assess their own liquidity needs and tolerance for capital being restricted."
However, PIMCO also differentiated between different tracks within private credit, believing that细分领域 like asset-backed financing still have investment value, offering "investment-grade-like" risk levels. Last year, PIMCO raised over $7 billion for its asset-backed financing strategy.
05 Repeating the Subprime Crisis?
The structural logic of this round of crisis is not complicated: semi-liquid products promise quarterly redemptions, but the underlying assets are longer-duration private loans; when redemption requests exceed a threshold, managers either gate or sell assets; selling depresses asset prices, triggers more valuation markdowns,进而引发更多赎回—thus the cycle.
This logic played out once in the subprime mortgage market in 2008. Back then, the initial cracks also appeared in a market corner considered "sufficiently diversified, sufficiently professional."
Today, the private credit market has reached a规模 of $1.8 trillion, and the risk concentration, valuation opacity, and liquidity mismatch within it are being tested in a similar way.
Twitter:https://twitter.com/BitpushNewsCN
Bitpush TG Discussion Group:https://t.me/BitPushCommunity
Bitpush TG Subscription: https://t.me/bitpush
