BlackRock Limits Private Credit Fund Withdrawals
BlackRock shares plunged 7% after restricting withdrawals from its $26 billion HPS Corporate Lending Fund, as redemption requests hit almost double the permitted quarterly limit. This sparked concerns about liquidity and contagion in the private credit sector, renewing questions about the resilience of private funds in periods of market stress.
BlackRock's HPS Corporate Lending Fund (HLEND), a non-traded business development company (BDC), saw redemption requests hit 9.3% of outstanding shares in Q1 2026. The fund chose to only fulfill 5% of those requests, paying out $620 million of the $1.2 billion requested. This is the first time withdrawal requests have exceeded the 5% limit since the fund's inception. HLEND invests in senior secured, privately originated loans to established companies, primarily taking first lien positions. These loans typically have floating rates and a relatively short investment life. As of January 2026, 93% of HLEND's portfolio was in private investments. BlackRock acquired HPS Investment Partners, which manages HLEND, in a $12 billion deal in 2024. HLEND's portfolio companies have recorded a 15% growth in earnings before interest, taxes, depreciation, and amortization over the past year. Despite the withdrawal limitations, HLEND had over $4.4 billion in available liquidity as of late February 2026 and had raised approximately $840 million in subscriptions during Q1 2026. The private credit market, where HLEND operates, is estimated to be between $1.5 trillion and $2.1 trillion in size, with approximately three-quarters of that in the United States. Some anticipate the private credit market will reach $3 trillion by 2028. This growth is driven by institutional investors seeking higher yields and diversification, as well as borrowers seeking flexible financing. Other firms are also seeing increased redemption pressure; Blackstone recently moved past its usual 5% redemption cap to 7%, and Blue Owl liquidated $1.4 billion worth of assets from several private credit strategies. This has sparked debate about the risks of illiquid funds for retail investors. HLEND has delivered a 10.7% annualized total return since its inception four years ago. At the end of December 2025, the net asset value per share stood at $25.22. The fund emphasizes that unfulfilled repurchase requests do not automatically carry over into the next tender-offer period. Concerns about rising defaults on loans to software companies, which comprise approximately 19% of HLEND's portfolio, may be contributing to investor anxiety. BlackRock's stock has faced bearish investor sentiment, along with other alternative asset managers. Despite recent challenges, BlackRock maintains a solid liquidity position and has a history of increasing dividends. Analysts have an average price target of $1311.89 for BlackRock, with a high of $1550.00 and a low of $1059.00.
