Private Credit: The Exit Is Smaller Than the Entrance
Investors put $1.8T into private credit funds over the past decade on the promise of higher yields and quarterly access to their money. This quarter they are discovering what quarterly access actually means when everyone wants it at the same time.
Apollo ($APO) filed with the SEC on June 22nd confirming redemption requests hit 16.8% of net asset value in Q2 2026, ~$2.4B of the fund's $14.3B total. The fund caps withdrawals at 5% of shares outstanding, ~$0.7B in gross outflows against $2.4B in redemption requests. The remaining capital stays in the fund and rejoins the queue for next quarter.
Apollo is not an isolated case. Blackstone's ($BX) $79B private credit fund received 10% redemption requests in Q2. Cliffwater hit 17%, HPS, which was acquired by BlackRock for $12B in Jan 2026, hit ~13%. Switzerland's Partners Group has also warned it may curb redemptions across several of its private asset vehicles following a surge in exit requests. Blue Owl's ($OWL) OTIC fund saw 40.7% redemption requests, nearly half the fund trying to exit simultaneously. Across the largest retail private credit funds, investors requested close to $14B in withdrawals during Q2, only around half of those requests were met.
This is not a financial crisis. The majority of the underlying loan portfolios are not obviously impaired; no forced liquidation cycle has started. The system is functioning exactly as it was designed to function, and that is the problem.
What Private Credit Is
Private credit funds lend money directly to companies; typically mid-sized businesses, leveraged buyouts, and increasingly technology and software companies, rather than going through banks or public bond markets. The loans are privately negotiated, held to maturity, and not traded on any exchange.
Banks pulled back from this type of lending after the 2008 financial crisis when new capital requirements made risky corporate loans expensive to hold, so private credit funds stepped in. Pension funds, endowments, and insurance companies poured capital in, attracted by yields of 11-13% at a time when public bonds yielded almost nothing.
The market grew from under $10B in AuM in the early 2000s to over $1.8T today. The number of private credit funds grew from less than 30 to nearly 1,000. Then the funds opened the product to retail investors.
To attract retail capital, the funds offered quarterly redemption windows. Investors could request their money back every three months. It appeared like the liquidity of a mutual fund with the returns of private lending.
It was never going to work when everyone wanted out at the same time.
The Exit
When a fund caps redemptions at 5% per quarter but 17% of shareholders want to leave, the fund fulfils 5% of shares outstanding on a pro rata basis. Every investor who requested a redemption receives the same fraction of what they asked for, not a first-come-first-served payout. Apollo confirmed each redeeming investor will receive ~45% of their requested funds this quarter. At Cliffwater, where requests hit 17%, investors received roughly 29 cents on every dollar requested.