As the market focuses on geopolitical risks, a quietly spreading private credit crisis is accelerating within the U.S. financial system. Redemption waves, asset sell-offs, fund closures—this script is familiar to investors from 2008.
This week, the world's largest asset management company, BlackRock, announced restrictions on investor redemptions for its $26 billion HPS Corporate Lending Fund (HLEND), marking the most impactful signal to date. Previously, Blackstone's private credit fund faced a record 7.9% redemption requests, and Blue Owl's stock price fell below its SPAC listing price. The three private credit giants are in distress, and the gears of a vicious cycle have already engaged.
Meanwhile, Pacific Investment Management Company (PIMCO) warned in its latest client report that the direct lending industry is about to enter a &#34;full default cycle,&#34; 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 movements of related listed companies. Blue Owl's stock price has fallen below its SPAC issuance price, and the valuations of private credit-related businesses at institutions like Blackstone and BlackRock are under pressure, with the entire industry facing a systemic reassessment of investor confidence.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/318c9f89-bafb-4ad5-9029-ed153ec00cb3.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/318c9f89-bafb-4ad5-9029-ed153ec00cb3.png"/>
<h2>Closure: BlackRock &#34;Restricts Redemptions&#34; for Its Private Credit Fund</h2>
According to a Wall Street Journal article, BlackRock announced on Friday that shareholders of its HPS Corporate Lending Fund (HLEND) have collectively requested to redeem 9.3% of their shares, but the fund management has decided to set the buyback limit at 5%, approximately $1.2 billion.
In the statement, BlackRock characterized this move as a &#34;fundamental&#34; arrangement for liquidity management, stating that without restrictions, there would be a &#34;structural mismatch&#34; between investor capital and the duration of private credit loans.
This wording sounds calm, but the market understands the implications: if full redemptions are honored, BlackRock will have to initiate large-scale asset sell-offs.
Previously, another private credit department under BlackRock had shown alarming signals—BlackRock TCP Capital Corp. reported in its fourth-quarter report that it would value a $25 million loan to Infinite Commerce Holdings at zero, down from 100 cents just three months prior when the loan was marked at face value
From 100 to 0, in three months, without any warning.
<h2>Fire Spreading: A Vicious Cycle Triggered by Sell-offs</h2>
BlackRock's gate closure is not an isolated incident, but rather the endpoint of a fuse that has already been ignited—or a new starting point.
Three weeks ago, Blue Owl Capital took the lead.
Faced with a large number of redemption requests (mainly due to its highly concentrated exposure to software loans, which are rapidly depreciating due to the impact of AI), Blue Owl announced the sale of $1.4 billion in private credit loans to modernize its assets and restore its quarterly redemption mechanism, effectively freezing investor funds as well.
The company emphasized that the assets intended for sale are all rated at the highest internal risk level (level 1 or 2 on a five-level scale).
However, this &#34;high-quality assets first&#34; strategy is precisely an accelerator for the spread of the crisis. If the buying interest in the secondary market exists only for high-quality assets, the portfolio sales of other business development companies (BDCs) will face thinner liquidity. It is reported that NMFC has indicated it is moving forward with the sale of approximately $500 million in its portfolio (accounting for 17% of its total investments as of the end of Q3 2025).
Blackstone's situation is equally severe. Its private credit fund BCRED manages $82 billion, and this quarter's redemption requests reached a record 7.9%, exceeding the statutory limit of 7%. To avoid triggering the gate closure mechanism, Blackstone employees were asked to personally subscribe $150 million to fill the gap.
Three institutions, three responses, but the logic is the same: gate closure or de facto gate closure, to avoid forced sell-offs that could trigger a larger valuation collapse. Analysts point out that the problem lies in the fact that BlackRock's gate closure decision itself has sent the strongest panic signal to the market, potentially triggering more investors to rush for redemptions.
<h2>Blue Owl: Stock Price Falls Below Issue Price, Risk Exposure Continues to Emerge</h2>
As the &#34;epicenter&#34; of this crisis, Blue Owl Capital's situation continues to deteriorate. Its stock price fell below the $10 SPAC listing issue price this week, hitting a three-year low.
According to Bloomberg citing informed sources, Blue Owl has a £36 million (approximately $48 million) exposure to London property loan institution Century Capital Partners Ltd.—this risk exposure was indirectly formed through its acquisition of Atalaya Capital Management in 2024.
Century filed for bankruptcy management last month, with total liabilities of approximately £95 million, and NatWest Group and Hampshire Trust Bank are its priority creditors.
Blue Owl holds the riskiest subordinate tranche in Century's loan portfolio. Century's administrator RSM UK expects to fully recover the priority loans, but the fate of the subordinate 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 sector. Now, the risks in this sector are surfacing in unexpected ways.
<h2>PIMCO Warns: A Comprehensive Default Cycle is on the Way</h2>
As the private credit market faces turbulence, 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:
<blockquote>
&#34;Like every mature segment of the leveraged finance market, direct lending will ultimately face a comprehensive default cycle—this cycle will simultaneously test its resilience to industry-specific shocks and macroeconomic shocks.&#34;
</blockquote>
PIMCO is one of the early critics of private credit. As fundraising for direct lending strategies surged, this institution, which manages approximately $2.3 trillion in assets, chose to take a contrarian position, actively seeking potential issues within private credit-supported companies.
PIMCO's analysis pointed out several core risk factors:
<blockquote>
<ul>
<li>
First, the record fundraising scale after the 2008 financial crisis has led to a continuous loosening of underwriting standards;
</li>
<li>
Second, the high concentration exposure of direct loan portfolios to the software industry will drag down relative performance under the impact of AI;
</li>
<li>
Third, direct lending funds have long failed to provide sufficient risk premium compensation for investors' liquidity lock-up.
</li>
</ul>
</blockquote>
Regarding the liquidity challenges faced by BDC investors, PIMCO's wording is equally straightforward: &#34;Semi-liquid does not equal fully liquid. Investors must assess their own liquidity needs and their tolerance for restricted funds.&#34;
However, PIMCO also distinguishes between different tracks within private credit, believing that niche areas like asset-backed financing still hold investment value and can provide &#34;investment-grade-like&#34; risk levels. Last year, PIMCO raised over $7 billion for its asset-backed financing strategy.
<h2>Subprime Crisis Revisited?</h2>
The structural logic of this round of crisis is not complex: semi-liquid products promise quarterly redemptions, but the underlying assets are long-duration private loans; when redemption requests exceed thresholds, managers either close the doors or sell off assets; the sell-off depresses asset prices, triggering more valuation adjustments, which in turn leads to more redemptions—thus a cycle is formed.
This logic played out once in the subprime mortgage market of 2008. At that time, the initial cracks also appeared in a market corner that was deemed &#34;sufficiently diversified and sufficiently professional.&#34; Now, the private credit market has reached $1.8 trillion, and the concentration of risks, valuation opacity, and liquidity mismatches are being tested in a similar manner.

VCIT

IGSB

FNCL

USHY

BXMT

SHYG

BlackRock restricts $26 billion fund redemptions, Blackstone's BCRED faces record 7.9% redemption requests, and Blue Owl's stock price falls below the issue price. PIMCO warns that direct lending will face a "full default cycle." The root of the crisis lies in the structural mismatch between semi-liquid products and long-duration underlying assets, with the wave of redemptions triggering asset sales, valuation adjustments leading to more redemptions, creating a vicious cycle highly similar to the 2008 subprime mortgage crisis

- A silent private credit crisis is developing within the U.S. financial system, with signs reminiscent of the 2008 financial crisis.  
- BlackRock's restriction on its $26 billion HPS Corporate Lending Fund, along with record redemptions at Blackstone and Blue Owl, highlights the increasing panic and structural mismatches in liquidity.  
- Analysts at PIMCO warn that a comprehensive default cycle is looming, driven by loose underwriting standards and concentration in software sector risks, making it clear that private credit faces significant challenges ahead.

Wallstreetcn

VG Financial

iShares iBoxx  Invt

Vanguard Intermediate Term Bd

Blue Owl Capital

iShares Trust iShares 1-5 Year Invest Grade Corp Bond ETF

Fidelity MSCI Financials Index

iShares Broad USD HY Corporate Bd

Blackstone MortgageTrust

iShares 0-5 YR HY Corp Bd

Don't just focus on Iran, the U.S. private credit crisis is gradually re-emerging like the "subprime mortgage crisis."