Key Takeaways
- • Non-traded private placement BDCs paid $1.2 billion in quarterly redemptions and publicly traded BDCs paid $7.4 billion in quarterly redemptions as of early April, according to the source, which cites record redemption levels.
- • Preqin, which examined loans held in these vehicles, found little indication that investor fears of rising defaults are justified, citing staggered maturities, moderate spreads over SOFR, and a majority of first-lien loans.
- • Hamilton Lane said current loan-to-value ratios are significantly lower than in 2007 and loan coverage ratios are higher, describing the sector outlook as average rather than bullish or bearish.
- • Hirtle Callaghan, which manages roughly $21 billion, said redemption pressure is driven mainly by investor sentiment and structural mismatch rather than defaults, and that only 10% of its private credit commitments sit in funds with gateable redemption structures.
- • Blackstone's Spring 2025 Advisor Pulse found that track record was the top selection factor for advisors (30%), while default and recovery rates ranked last (9%).
Summary
Non-traded private credit business development companies (BDCs) are paying record redemptions this quarter, prompting asset managers and registered investment advisers (RIAs) to reassure investors that the outflows do not reflect deterioration in loan portfolios. According to the source, private placement BDCs paid $1.2 billion in quarterly redemptions and publicly traded BDCs paid $7.4 billion as of early April.
Research from London-based Preqin, which examined the loans held in these vehicles, found little evidence that investor fears of rising defaults are warranted. The loans generally have maturities spread over several years, carry moderate spreads over SOFR, and are predominantly first-lien, which places the funds among the first to be repaid in a distress scenario.
Hamilton Lane, in a roundtable with media on April 17 and a note on its website, pointed to loan-to-value ratios that are significantly lower than in 2007, before the Global Financial Crisis, along with higher loan coverage ratios. Executives described the sector outlook as neither bullish nor bearish, but average. Jackie Rantanen, managing director on Hamilton Lane's evergreen portfolio management team, described private credit as "the silver age" of the asset class and said it has been far less volatile than public markets. She stressed that funds differ in managers, portfolio construction and focus.
Blackstone's Spring 2025 Advisor Pulse report found that financial advisors ranked the manager's track record as the most important factor in selecting a private credit fund (30% of respondents), ahead of credit underwriting experience and size and scale. Default and recovery rates were cited by only 9% as the top criterion.
In an April 16 note, Hirtle Callaghan, a West Conshohocken, Pa.-based RIA managing roughly $21 billion, said underlying credit performance across most portfolios remains broadly healthy and that redemption pressure stems primarily from sentiment and structural mismatch. The firm told clients that only 10% of its private credit commitments are in funds with gateable redemption structures and that it has not seen elevated credit stress in its portfolio.
Research from London-based Preqin, which examined the loans held in these vehicles, found little evidence that investor fears of rising defaults are warranted. The loans generally have maturities spread over several years, carry moderate spreads over SOFR, and are predominantly first-lien, which places the funds among the first to be repaid in a distress scenario.
Hamilton Lane, in a roundtable with media on April 17 and a note on its website, pointed to loan-to-value ratios that are significantly lower than in 2007, before the Global Financial Crisis, along with higher loan coverage ratios. Executives described the sector outlook as neither bullish nor bearish, but average. Jackie Rantanen, managing director on Hamilton Lane's evergreen portfolio management team, described private credit as "the silver age" of the asset class and said it has been far less volatile than public markets. She stressed that funds differ in managers, portfolio construction and focus.
Blackstone's Spring 2025 Advisor Pulse report found that financial advisors ranked the manager's track record as the most important factor in selecting a private credit fund (30% of respondents), ahead of credit underwriting experience and size and scale. Default and recovery rates were cited by only 9% as the top criterion.
In an April 16 note, Hirtle Callaghan, a West Conshohocken, Pa.-based RIA managing roughly $21 billion, said underlying credit performance across most portfolios remains broadly healthy and that redemption pressure stems primarily from sentiment and structural mismatch. The firm told clients that only 10% of its private credit commitments are in funds with gateable redemption structures and that it has not seen elevated credit stress in its portfolio.
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