Apollo and BlackRock Cap Withdrawals — $1.8 Trillion Private Credit Market Under Real Stress

Apollo Global Management capped investor redemptions at one of its largest non-traded private credit funds, Apollo Debt Solutions.

According to a shareholder letter, it capped redemptions at 5% of outstanding shares after investors sought to withdraw roughly 11.2%. The move follows similar restrictions at other private credit funds in recent weeks, deepening concerns across the $1.8 trillion private credit market.

BlackRock imposed a similar 5% cap on its $26 billion HPS Corporate Lending Fund in early March, after withdrawal requests hit 9.3% of net asset value. 

Blue Owl Capital also permanently ended quarterly redemptions at Blue Owl Capital Corp II (OBDC II), a retail-focused fund, replacing them with periodic distributions funded by asset sales. 

The rising number of withdrawal requests comes as investors grow anxious over lenders’ heavy exposure to software companies. The sector is now under pressure from artificial intelligence (AI) disruption.

Major financial institutions’ moves add to the concern. Goldman and JPMorgan are giving hedge fund clients ways to short the private credit market.

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Meanwhile, Moody’s downgraded FS KKR Capital Corp. (FSK), jointly run by Future Standard and KKR & Co, from Baa3 to Ba1.

“The downgrade reflects FSK’s continued asset quality challenges, which have resulted in weaker profitability and greater net asset value erosion over time relative to business development company (BDC) peers. The downgrade also reflects other credit-negative characteristics of FSK’s credit profile, including leverage at the high end of the peer group and less senior-oriented asset composition. Further, FSK’s secured debt reliance has increased to a level above its peers, which we expect to be sustained. That said, FSK is well positioned from a liquidity perspective, with sufficient available revolver capacity and well-laddered unsecured debt maturities,” the text reads.

These developments are the latest in a series of moves that confirm mounting stress across the private credit market. With rising redemption requests and AI-driven disruption pressuring the software loans that fueled the sector’s growth, the cracks are widening.

How fund managers navigate the next quarter, as investor demands for liquidity collide with portfolios built on illiquid assets, will determine whether the stress remains contained or accelerates.