BlackRock said on Friday it has limited withdrawals from a flagship debt fund after a surge in redemption requests, as investor worries mount around the $2 trillion private credit industry.
Shares of the world’s largest asset manager fell 6.7% on the New York Stock Exchange, amid a broader market selloff after worse-than-expected U.S. jobs data and escalating U.S.-Israeli war against Iran.
Sentiment has soured around private credit in recent months, and retail investors are increasingly asking for their money back from funds like BlackRock’s $26 billion HPS Corporate Lending Fund (HLEND), which were designed to be open to wealthy individuals.
“It should serve as a warning sign for the industry and the rulemakers about the downside of illiquid funds for retail investors,” said Greggory Warren, senior stock analyst at Morningstar.
Last year’s bankruptcies of a U.S. auto parts supplier and a subprime auto lender, along with the collapse of a UK mortgage lender last week, have raised questions about lending standards.