Morgan Stanley Limits Private Credit Redemptions
Amid surging outflows, Morgan Stanley limited redemptions on a private credit fund, returning less than half of the requested capital reported.
The North Haven Private Income Fund (PIF) saw redemption requests reach nearly 11% of outstanding shares. Morgan Stanley ultimately returned about 45.8% of the requested amount, roughly $169 million, due to pre-existing quarterly withdrawal caps. The fund's offering documents limit withdrawals to around 5% of outstanding units per quarter. This is designed to prevent forced asset sales during market stress and protect long-term investor returns. Investor anxiety is increasing across the $2 trillion private credit market. JPMorgan has also reduced borrowing capacity for some private credit firms by marking down loans used as collateral. These adjustments largely affect software company loans, where AI disruption fears are rising. Other firms like BlackRock, Blackstone and Blue Owl have also seen heightened withdrawals from their private credit funds. Concerns include uncertainty around M&A recovery, potential credit deterioration, and contracting asset yields.
