The private credit crisis in the United States is spreading! "The world's largest asset manager" is also forced to "restrict redemptions" of its private credit funds.

BlackRock's flagship private credit fund, with assets under management totaling 26 billion US dollars, has announced restrictions on withdrawals, capping investor withdrawals at 5%, causing the company's stock price to decline and leading to a decline in financial stocks. According to a statement released by BlackRock on Friday, shareholders of its HPS Corporate Lending Fund (HLEND) collectively requested to redeem 9.3% of shares, but the fund management decided to set the repurchase limit at 5%. According to Bloomberg calculations, the total value of shares requested for redemption by shareholders is approximately 1.2 billion US dollars, while the approved redemption amount is approximately 620 million US dollars, equivalent to 5% of the year-end net asset value of the fund. After the announcement, BlackRock's stock price fell by 8.3% on the same day. Shares of alternative asset management companies such as Blue Owl and Ares Management also fell concurrently, marking the worst performance at the beginning of the year in nearly a decade. The private credit industry as a whole is facing pressure from investor redemptions. These funds initially attracted billions of dollars from individual investors and wealthy individuals due to their high returns. However, as soon as signs of pressure emerge, they begin to withdraw. With a surge in redemption requests, funds implemented "gates." BlackRock stated that the measures to restrict redemptions are in line with its consistent liquidity management principles for its flagship direct lending retail product HLEND and are a "foundational" feature of the investment. In its statement, BlackRock said: Without this mechanism, there would be a structural mismatch between investor capital and the expected term of the private credit loans invested by HLEND. The company also added that when attractive investment opportunities are not seen, it restricts inflows of funds "rather than diluting the returns of existing shareholders or compromising our underwriting standards." HPS executives also stated on Friday that restricting redemptions will help the fund seize "attractive investment opportunities" amid current uncertainty and market volatility. Last month, HLEND had proposed a tender offer to repurchase up to 5% of shares, with the previous redemption requests amounting to around 4.1%. The 9.3% redemption demand this time indicates a significant increase in investors' desire to exit. In addition, another private credit fund under BlackRock with assets totaling approximately 2.2 billion US dollars also disclosed on Friday that investors requested to redeem 4.5% of their shares. This fund is called the BlackRock Private Credit Fund, with assets totaling approximately 2.2 billion US dollars as of the end of the year. The fund will meet all these redemption requests. Concerns over the impact of artificial intelligence exacerbate, putting pressure on the private credit industry Private credit funds are generally facing pressure from a new wave of redemptions, with core concerns coming from two aspects: whether the industry's overall loan standards are prudent, and the exposure risk of the invested companies to the disruptive impact of artificial intelligence. HPS Investment Partners is one of the world's largest alternative credit management firms and was acquired by BlackRock last year, serving as an important part of the latter's strategy to expand its private asset portfolio. This redemption event occurred against the backdrop of significant macroeconomic uncertainty in the alternative asset management industry, and the market will closely monitor how participants in private credit balance liquidity management with investor relations. According to Bloomberg, Blackstone's flagship private credit fund met a record 7.9% redemption request this week, with some of the funds coming from the company itself and employee involvement to hedge against some withdrawals. However, analysts have raised questions about whether the industry can sustain continuous high redemption pressure in the long run. The reason is that the assets held by such semi-liquid funds are mostly loans, and these loans are rarely, if ever, traded in the market. Blue Owl announced last month a permanent suspension of redemption requests for one of its funds, further adding to market volatility at a time when investors have generally lost interest in this asset class. This article is selected from "Wall Street News" and authored by Yilong Bao; edited by Yucheng He.