Morgan Stanley caps private credit fund withdrawals again as 11% seek exits

Morgan Stanley, like its peers Blackstone and BlackRock, is restricting redemptions from its private credit fund in the third quarter. Investors have requested to withdraw more than twice the amount the fund is willing to buy back. The North Haven Private Income Fund has set the limit at 5 per cent, as investors sought to pull 11.4 per cent of shares, a figure that remained relatively unchanged from the previous quarter.

The fund disclosed that repurchases across three periods up to September will amount to roughly US$479 million. A significant proportion of these withdrawal requests, nearly two-thirds, originated from investors who had previously faced restrictions on their withdrawal requests in earlier offers. Despite a general decline in redemption requests at major funds in the latest quarter, they remain persistent as investors continue to seek to extract cash from the $1.8 trillion private credit market.

This situation has prompted Morgan Stanley to align with many of its competitors, such as Blackstone and BlackRock, in implementing measures to curb investor withdrawals. The fund's management is currently addressing a backlog of around US$15 billion in withdrawal requests following a surge in exit requests over the past year, fueled by concerns over underwriting standards and lenders' exposure to vintage software investments.