Redemption Wave Forces Billions in Private Credit Sales

Edgen Stock·Mar 09 2026, 01:46

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Key Takeaways

A surge in redemption requests from retail investors is forcing major private credit funds, including Blackstone and Blue Owl, to liquidate billions in assets. This pressure is creating significant dislocations, with some assets selling at notable discounts and creating a fertile ground for secondary market buyers who can acquire loans below their stated value.

Major funds are selling assets to meet withdrawal demands, including a $1.4 billion loan sale by Blue Owl BDCs and a $477 million asset sale by New Mountain Finance.
Blackstone's Bcred fund breached its quarterly withdrawal limit, receiving redemption requests for $1.7 billion, equivalent to 7.9% of its assets, well above its 5% cap.
Secondary market activity is accelerating, with transaction volume growing nearly 83% to $20 billion last year, as buyers like Saba Capital offer to purchase BDC shares at discounts of up to 35% to net asset value.

Funds Unload Over $1.8B in Assets to Meet Withdrawals

Private credit firms are selling assets at a rapid clip to generate liquidity as investors, particularly wealthy individuals, head for the exits. In a significant move, a consortium including the California Public Employees’ Retirement System (CalPERS) acquired $1.4 billion in loans from Blue Owl Capital BDCs. The deal, priced at a slight discount of 99.7% of par value as of February 12, was structured to help the BDCs return cash to investors. Shortly after, New Mountain Finance Corp. executed a $477 million asset sale at a steeper discount, pricing the assets at 94% of their fair value marks from the end of last year. The firm stated the sale was intended to reduce its holdings of payment-in-kind assets, which do not generate immediate cash flow.

Secondary Market Volume Soars as Discounts Emerge

The pressure on funds is creating a buyer's market for specialized secondary investors. Blackstone’s retail-focused Bcred fund highlighted the trend when it received redemption requests totaling $1.7 billion for the quarter ending March 31. This figure represents 7.9% of the fund's assets, surpassing its typical 5% quarterly limit and forcing the manager to find liquidity. This imbalance between sellers and buyers is driving down prices, with firms like Saba Capital Management and Cox Capital Partners launching cash tender offers for shares of unlisted Blue Owl BDCs at expected discounts of 20% to 35% below their most recent net asset value (NAV). This activity follows a year where secondary private-credit transaction volume surged nearly 83% to approximately $20 billion, up from just $2.4 billion in 2020.

Default Rates Hit 9.2% High, Raising Asset Quality Questions

Underlying the redemption pressure are growing concerns about the health of the private credit market itself. A March report from Fitch Ratings revealed that the default rate within its private credit portfolio climbed to a new high of 9.2% in 2025, a significant increase from 8.1% the previous year. While defaults were not concentrated in a single sector, the rising rate questions the quality of loans held across the industry. Despite these warning signs, private credit executives maintain confidence in their portfolios. Blue Owl's Co-Chief Executive, Marc Lipschultz, told analysts last month, "We don’t have red flags. We actually have largely green flags."