First Blackrock…Now: Private Credit Exodus Forces Caps at Cliffwater, Morgan Stanley

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Morgan Stanley and Cliffwater LLC capped withdrawals from their multibillion-dollar private credit funds after investors sought to redeem vastly more than the vehicles allow. Cliffwater’s $33 billion flagship private credit vehicle limited redemptions to 7% of shares in the first quarter, after investors sought to pull a record 14%. Morgan Stanley’s North Haven Private Income Fund, which has almost $8 billion in assets, returned around $169 million, or less than half of investors’ tender requests, after capping redemptions at 5% of shares. The moves are among the starkest examples yet of private credit funds grappling with a wave of redemption requests amid growing concerns over the quality of their loans, particularly to software companies under threat from artificial intelligence. While most funds had sought to meet investor demands for cash, BlackRock Inc. last week decided to limit withdrawals, a move that other managers have since followed. Representatives for Cliffwater and Morgan Stanley declined to comment.

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