The private credit industry, a once-booming corner of the lending markets, is facing an investor exodus and heightened scrutiny of its risky practices. The bad news seems to keep coming. On Tuesday, Ares Management, an investment firm with more than $600 billion in assets, said it would block roughly half of the redemption requests from one of its private credit funds. A day earlier, the private equity giant Apollo Global Management said the same of one of its funds.
They aren’t the first firms to prevent investors from withdrawing capital from a private credit fund, but the notices are another sign that concerns over the industry are accelerating.
Also on Monday, the debt-ratings agency Moody’s downgraded a private credit fund run by KKR to junk status, warning investors that a growing number of the fund’s outstanding loans were not being repaid and that its profitability is at risk. Though Moody’s noted that the fund has capital to fall back on, the downgrade was one of the first significant such cuts to a private credit fund’s rating.
In a statement, KKR said the fund “remains well positioned despite the decision,” noting that it doesn’t have any unsecured debt coming due this year and can “continue supporting our portfolio companies and navigate the current market environment.”
Over the past decade, private credit — a catchall term for lending by alternative asset managers — has ballooned from a small part of the debt market to one that’s more than $1 trillion in size. Endowments and pension funds have poured money into private credit funds, as did individual investors that could buy into funds known as business development corporations or BDCs, some of which trade on stock exchanges.
For years, these funds performed better than most other debt funds, and they’ve been billed as relatively safe investments, even as firms like Apollo and Blue Owl lend mainly to companies with risky credit ratings.
But investors have become more concerned about the health of the industry and whether these firms, which operate largely outside of the scrutiny of regulators, have been valuing their loans appropriately. A large chunk of private credit loans have been made to software companies, an industry that’s come under pressure from the swift rise of artificial intelligence firms.
Shares of all the major private credit providers have fallen sharply. The giant private lender Blue Owl is down 40 percent in 2026. Ares’s shares are down about 34 percent this year. Apollo, which is more diversified in other areas including insurance, has seen its shares fall about 23 percent this year.
While endowments and pensions tend to give money to firms like Blue Owl for long periods of time, smaller investors expect to be able to pull their money out anytime they want. But most of the funds say they limit withdrawals to 5 percent per quarter. Until recently that hadn’t been an issue.
In mid-February, Blue Owl became one of the first firms to change how investors could extract their money from one of its funds, following a wave of redemption requests. Since then, BlackRock has also limited investor redemptions.
Ares on Tuesday said that roughly 11.6 percent of investors in one of its funds, Ares Strategic Income Fund, sought to redeem their shares. Ares said it would honor 5 percent, or less than half of those requests. The firm said in an investor letter that the requests were “made by a limited number of family offices and smaller institutions in select geographies” and that sticking to the 5 percent limit was “aligned with what we believe are the best interests of the fund and all of our stakeholders.”
Apollo received a similar proportion of redemption requests — 11.2 percent — in a fund that manages roughly $15 billion in loans. The firm said it would honor 5 percent of those requests consistent with the fund’s preordained limits.
“As long-term stewards of capital, we have a fiduciary duty to act in the best interests of all Fund investors, balancing the interests of shareholders seeking liquidity with those who choose to remain invested,” the firm wrote in a letter to shareholders.
Maureen Farrell writes about Wall Street for The Times, focusing on private equity, hedge funds and billionaires and how they influence the world of investing.
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