Blackstone’s $77bn private credit fund keeps 5% redemption limit
TOP STORY: Blackstone’s flagship private credit vehicle is maintaining its 5% quarterly redemption limit after investors sought to withdraw around 10% of the fund during Q3, highlighting continued liquidity pressure across the non-traded private credit market, according to a report by Reuters.
Blackstone's $77 billion private credit fund, Blackstone Private Credit Fund (BCRED), has decided to keep its 5% quarterly redemption limit despite investors' attempts to withdraw around 10% of the fund's holdings during Q3, according to Reuters. The fund, which holds about $77.2 billion in assets, received approximately $4.3 billion in repurchase requests for the quarter.
Blackstone will honor 5% of outstanding shares, adhering to the standard quarterly limit. The level of redemption requests was similar to the previous quarter, when investors sought to withdraw roughly 10% of their holdings. The ongoing demand for liquidity is due to private credit's growing concerns over underwriting standards and the potential impact of artificial intelligence on software companies, which form a significant portion of the direct lending market.
BCRED has seen net outflows of around 3% during the quarter, while new investor demand generated close to $750 million in inflows. Blackstone reported that other private wealth products have experienced stronger fundraising momentum compared to the second quarter, indicating that investor appetite for alternative assets has not uniformly declined across the firm's platform.
The latest figures also highlight the extent of the redemption backlog facing BCRED, with the fund receiving around $4.5 billion in repurchase requests in the second quarter but only fulfilling about half of them, leaving approximately $2.3 billion outstanding. Blackstone assures that BCRED remains well-capitalized, with loan repayments and new investment inflows consistently exceeding the value of share repurchases.
The underlying portfolio is deemed fundamentally sound, with most portfolio companies performing in line with or ahead of expectations. Blackstone's Class I shares have delivered an annualized total return of about 9% since inception, outpacing leveraged loans by approximately 290 basis points. However, Schorr noted that BCRED's year-to-date performance of 0.9% has trailed some peers, partly due to specific credit issues and write-downs involving portfolio companies such as Medallia and Affordable Care.
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