Morgan Stanley, Cliffwater Limit Private Credit Fund Withdrawals Amidst Investor Concerns
Withdrawals from private credit funds managed by Morgan Stanley and Cliffwater LLC have been capped following increased investor attempts to redeem shares, signaling growing strain within the $1.8 trillion private lending market. Concerns center around the quality of loans, particularly those extended to software firms potentially vulnerable to advancements in artificial intelligence.
Redemption Restrictions
Cliffwater’s $33 billion flagship private credit vehicle restricted redemptions to 7% of shares in the first quarter after investors sought to withdraw approximately 14% of their holdings – nearly tripling the prior quarter’s level. Morgan Stanley’s North Haven Private Income Fund, with roughly $8 billion in assets, limited redemptions to 5% of shares and returned only $169 million, less than half of the investors’ requested amount.
Broader Market Trends
These actions represent some of the most significant instances to date of private credit funds grappling with a surge in redemption requests. BlackRock Inc. Also recently restricted withdrawals, a move mirrored by other fund managers, though many had previously been able to meet investor demands for cash. The restrictions come as JPMorgan Chase & Co. Is limiting some lending to private credit funds after reducing the value of certain software-linked loans within its portfolios. Even as currently impacting a limited number of borrowers and not triggering substantial margin calls, the decline in asset values constrains the bank’s lending capacity to these funds.
Underlying Concerns
Mounting worries about the quality of illiquid loans are fueling the redemption pressures. The situation highlights the risks associated with semi-liquid private credit funds, where investors can request withdrawals but are subject to limitations. Experts note that runs on these funds are predictable, as investors tend to follow each other towards the exits when concerns arise.
Market Impact
The strain in the private credit market contributed to a broader market downturn on March 11, 2026, with stocks retreating globally and oil prices rising amid disruptions in the Middle East. Brent crude briefly surpassed $100 a barrel due to escalating tensions and disruptions to crude transport operations.
Company Response
Representatives from both Morgan Stanley and Cliffwater LLC declined to comment on the situation.
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