A $26 Billion Problem + A $33 Billion Problem =
Submitted by QTR's Fringe Finance
More concern in one area of financials keeps showing up every day.
According to Bloomberg, Cliffwater is now facing redemption requests exceeding 7% in its $33 billion Cliffwater Corporate Lending Fund, one of the largest interval funds in private credit.
Because the fund is structured as an interval fund, it is required to repurchase up to 5% of its shares each quarter if investor demand reaches that threshold. Management does have discretion to increase that amount to 7%, but anything beyond that would effectively require limiting withdrawals.
The redemption window closes Tuesday, and the firm has not yet decided whether it will meet the higher threshold or cap redemptions, the Bloomberg report says.
Cliffwater is the latest manager in the $1.8 trillion private credit market facing rising withdrawal pressure as investors grow more concerned about loan quality and exposure to sectors like software that could be disrupted by advances in artificial intelligence.
As I wrote about last week, this is exactly the dynamic many private credit managers have been trying to avoid.
When BlackRock began limiting withdrawals from one of its largest private credit vehicles after redemption requests surged, it highlighted a structural issue in the...(READ THIS FULL ARTICLE HERE).
