BlackRock BLK-7.17% shares tumbled Friday after the asset manager said it had decided to limit withdrawals from one of its private credit funds following a wave of redemption requests in the first quarter.In a letter to shareholders, the HPS Corporate Lending Fund, known as HLEND, said it had received requests to repurchase approximately 9.3% of shares outstanding as of Dec. 31, 2025, exceeding the 5% framework for the first time since its inception. HPS told investors it would pay out $620 million, hitting the 5% limit.It was the latest scare for the private credit sector after Blackstone BX-4.46% on Tuesday disclosed that its flagship private credit fund, BCRED, saw record redemption requests in the first quarter.BlackRock tumbled 7.5% to $951.76 on Friday, making it one of the worst performing stocks in the S&P 500 SPX-1.33%. The benchmark index was down 1.2%.So-called alts are clearly under pressure. The panic began last month, when Blue Owl said certain business development companies had agreed to sell $1.4 billion in loan assets. The firm simultaneously halted quarterly redemption requests at one of its funds, saying it would return capital to investors through periodic payouts from asset sales and earnings going forward.Much of the present debate on Wall Street centers on whether investors have a crisis on their hands, similar to 2008. Oppenheimer analyst Chris Kotowski defended his Outperform rating on Blue Owl stock Thursday, arguing that the firm’s recent troubles weren’t symptomatic of a larger issue.Separately, Fitch Ratings said Friday that the default rate in its portfolio of U.S. privately monitored ratings hit a new high of 9.2% in 2025, up from 8.1% in 2024. The figure exceeded the 4.5% default rate recorded for Fitch’s broadly syndicated loan universe.Still, Fitch asserted that losses remained contained despite record-high defaults, writing that “realized losses for first lien lenders remained limited.”HPS, too, struck a cautiously optimistic tone. “Historically, periods of uncertainty and volatility have created some of the most compelling investment opportunities within private credit markets,” the fund wrote in its letter. “We believe that we are entering into that type of environment.”
LONDON, March 16 (Reuters) - Global hedge funds sold shares of bank, insurance, fin-tech and trading companies in the week to March 13, making financials the most sold stock sector this year, said Goldman Sachs in a note to clients seen by Reuters on Monday. Hedge funds "aggressively shorted" global financial stocks last week and the sector was net sold internationally, the note said.A short bet profits when asset values decline. S&P's financials index has fallen over 11% this year while an index of banks in Europe is down around 8%.The moves come as the sector, alongside broader markets, faces selling pressure on concerns about the impact of the Middle East war on the global economy and concern that the connection between financial firms and private lending could be more closely entwined than previously thought. A recent Moody's report showed U.S. banks had lent nearly $300 billion to private credit providers as of June 2025. JPMorgan Chase reduced the value of some loans to private credit funds after reviewing the impact of market turmoil around software companies, Reuters reported last week following an FT report. "When a large institution like JPM (JPMorgan) starts marking deals lower, markets pay attention because it raises the possibility that others may eventually have to follow," said Bruno Schneller, managing director at Erlen Capital Management."If investors worry the marks across the system could move, the easiest way to hedge that risk is through liquid proxies like banks, insurers and financial indices," added Schneller who added that short positions in financial stocks might be less a view on the banks themselves than a hedge against credit risk across the broader financial system. This might also add a way for speculators to recession-proof their portfolios, he said. All sub-sectors in finance (excluding regional banks) were net sold so far this year, led by capital markets firms, financial services and consumer finance, said the Goldman report.
Wall Street’s private credit crisis has deepened after two of the world’s largest “shadow banks” blocked cash withdrawals from their flagship funds.Apollo Global Management has capped redemptions after investors tried to pull $1.6bn (£1.2bn) in just three months, the latest sign of stress sweeping across the $3tn sector.The US private credit giant said the withdrawal requests totalled 11.2pc of the fund’s $15bn in net assets – more than double the 5pc quarterly cap on redemptions that the fund allows.Apollo is a major player in the shadow banking sector, responsible for about $700bn of private loans made to companies.Separately, Ares, one of Apollo’s competitors, also limited redemptions at its $10.7bn private credit fund.Clients of the Ares Strategic Income Fund sought to redeem 11.6pc of the fund, but Ares has capped withdrawals at 5pc, equivalent to roughly $525m.Ares said that only a small portion of its overall investor base chose to withdraw money, with redemption requests coming from a number of family offices and smaller institutions in what it said were “select geographies”.The drastic steps signal a fresh blow to the sector, which has been hit by concerns that lax regulations and large balance sheets could pose a risk to financial stability. Shadow banking, in which funds make large private loans to companies, is a largely unregulated industry.
