The private credit sector is facing a serious crisis of confidence after Morgan Stanley restricted redemptions from its fund and JPMorgan Chase began marking down the value of loans, triggering a wave of sell-offs on stock exchanges.
Redemption freeze at Morgan Stanley
The bank restricted redemptions in its private credit fund following a sharp increase in capital withdrawal requests.
Asset markdowns by JPMorgan
The largest US bank is conducting so-called markdowns of loan values, which could cut funds off from debt financing (back leverage).
Doubts surrounding Blue Owl Capital
The Financial Times reports that a fund has questioned the reliability of valuations in Blue Owl Capital's credit portfolio.
Stock market declines
Asset managers' stocks recorded noticeable declines in response to concerns about liquidity and the real value of credit portfolios.
On March 12, 2026, Morgan Stanley restricted redemptions from its private credit fund following a sharp increase in withdrawal requests from investors. This decision triggered an immediate market reaction, leading to declines in Morgan Stanley's stock price and those of other asset managers. Investors began a mass sell-off of shares in funds from this sector, which translated into a deterioration of sentiment across the entire financial market. The restriction of redemptions is seen as a warning signal for a segment that has enjoyed immense popularity in recent years. The private credit market grew dynamically over the last decade, filling the gap left by traditional banks, which reduced lending to risky enterprises after the 2008 financial crisis. This sector became a key element of investment portfolios for institutions seeking higher returns in a low-interest-rate environment. The current tensions are among the most serious since the formation of the modern structure of this market.
Parallel to Morgan Stanley's actions, JPMorgan Chase conducted a markdown of the value of loans extended to companies operating in the private credit sector. According to sources close to the institution, this step aims to limit further lending activity to entities in this segment, which could deepen liquidity problems. The situation was further exacerbated by a report published by the Financial Times, which stated that an investment fund had questioned valuations in the credit portfolio of Blue Owl Capital. Undermining the credibility of valuations for assets not publicly traded strikes at the foundations of trust in credit funds managed by New York firms.
Analysts point to growing risks associated with the back leverage mechanism, which is becoming another flashpoint in the sector. The use of debt to finance credit portfolios by funds could lead to a domino effect in the event of further valuation declines and the need to top up collateral. The current capital outflow, described by media as a mass investor flight, threatens the stability of the entire business model upon which the private credit boom on Wall Street was built. The situation remains fluid, and markets are anxiously watching the next steps of the largest players in the banking and investment sector.
Crisis in the private credit sector (March 12, 2026): March 12, morning — Redemption freeze at Morgan Stanley; March 12, noon — Controversy around Blue Owl Capital; March 12, afternoon — JPMorgan Chase's reaction; March 12, evening — Stock market sell-off