The private credit market is showing signs of strain. In the first quarter of 2026 alone, over $4.6 billion in investor capital was locked in more than a dozen funds, as redemption requests overwhelmed the ability to return cash. Total withdrawal requests for the sector have reached roughly $13 billion this year.
The BlackRock HPS Corporate Lending Fund, a $26 billion vehicle, capped redemptions after receiving $1.2 billion in requests. The Ares Strategic Income Fund limited withdrawals to 5% of assets, despite demands for 11.6%.
Morgan Stanley projects direct lending default rates could hit 8%, matching the peak seen during the COVID disruption of 2020. Apollo Global Management CEO Marc Rowan warns of a deeper shakeout in private markets, driven by geopolitics, inflation, and technological shifts.
Analysts caution that stress in private credit could spill into digital assets. If funds are forced to sell assets to meet redemptions, multi-asset investors may liquidate crypto holdings to reduce risk. During the March 2020 credit freeze, Bitcoin dropped nearly 50% in a single day. A similar dynamic played out during the 2022 tightening cycle.