BlackRock’s $26 Billion Private Credit Fund Limits Withdrawls

Summary

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Bloomberg Intelligence Podcast Summary

Episode: BlackRock’s $26 Billion Private Credit Fund Limits Withdrawals

Date: March 6, 2026
Hosts: Paul Sweeney and Scarlet Fu

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Episode Overview

This episode of Bloomberg Intelligence dives into three major themes affecting Wall Street and global markets:

1. BlackRock’s limitation on client withdrawals from its $26 billion private credit fund.
2. The "ghost trade" and AI-driven anxieties in tech stocks.
3. The current state and outlook of US commercial real estate, with insights from a top Morgan Stanley executive.

Each segment features expert analysis and interviews with key industry insiders, delivering the latest on liquidity crunches, macroeconomic volatility, and structural trends affecting private credit, technology, and real estate investment.

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Key Discussion Points & Insights

1. BlackRock’s Private Credit Fund Withdrawal Limits

Segment Start: [02:33]

Background & Market Context

• Context: A wave of redemption requests forces BlackRock to limit withdrawals from its HPS corporate lending fund.
• Marketplace Mood: Recent months have seen worry about private credit quality, with similar situations at other asset managers (e.g., Blue Owl).

Liquidity Mismatches and Investor Expectations

• Brian Chapata (Bloomberg’s Managing Editor for Leveraged Finance & Distressed Debt) explains that BlackRock’s fund, acquired via HPS last year, saw 9.3% withdrawal requests, almost double the 5% threshold at which it can legally limit redemptions.
• Chapata notes, “They threw up the gates, as they like to say, and as a result, investors aren’t getting the full money back that they expected.” [03:12]

Comparison with Other Fund Managers

• BlackRock’s move is unusual. Blackstone, facing a similarly high redemption rate recently, instead funded redemptions with company and employee money to avoid imposing limits.
• Quote: “For a long time we have not seen any asset manager actually say we are limiting withdrawals because it’s not a good look…” – Brian Chapata [04:25]

Systemic Risk or Isolated Event?

• Presently, primarily a liquidity—not a credit—problem. Many investors, particularly retail, misunderstood the illiquid nature of private credit funds.
• “There’s a mismatch… between maybe some of the retail investors that got into these products… who expect that if they want their money back, they can get their money back.” – Brian Chapata [05:13]
• The hosts and guest reference how similar negative feedback loops occurred in commercial real estate during Fed rate hikes; cautions that if forced selling spreads, it could threaten broader markets.

Broader Credit Market Impact

• Signs of spillover: Fund managers trying to raise liquidity are selling what’s most liquid (e.g., leveraged loans), which has hit even high-quality loan prices.
• “That’s actually hitting loan prices a little bit more than we might expect, even though those loans are relatively higher quality…” – Brian Chapata [06:29]

Fundraising Headwinds and Market Sentiment

• Despite challenges, some managers (e.g., Dan Loeb) are still raising private credit funds, albeit in a more cautious environment.
• “Nobody really cares about liquidity until they do. And when they do, it can be kind of what we’re seeing today.” – Brian Chapata [07:13]

Geopolitical Risk Overlay

• The Iran conflict has so far only resulted in short-term market pauses, but commodity-exposed borrowers are being watched for emerging trouble.

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2. AI, Tech Stocks, and the “Ghost Trade”

Segment Start: [09:45]

The Analyst’s Perspective on Tech Sector Volatility

• Guest Analyst: Dan Ives, Global Head of Technology Research at Wedbush Securities, shares insights on “ghost trade” fears—the idea that advanced AI (including Anthropic) will render traditional software obsolete.

Dismissing "Doomsday" Tech Scenarios

• Ives refers to extreme predictions (like a widely-cited “Citrini Report” warning about AI’s disruption by 2028) as exaggerated:
  “That’s like me saying in two years I’m going to be in pole vault in the Olympics in LA.” – Dan Ives [11:24]
• Remains bullish: “We’re in the early days of an AI revolution and… a secular tech bull market. … the US… is ahead of China when it comes to tech.” [11:49]

Relative Risks Across Sub-Sectors

• Cybersecurity software (Crowdstrike, Palo Alto, Zscaler) is the least threatened by generative AI; in fact, AI’s growth increases security needs.
• “The most disconnected of all software is cybersecurity… nothing is replacing that, and to some AI just increases the surface area.” – Dan Ives [12:17]
• Core platforms like Microsoft and Salesforce, and data-oriented solutions (e.g., Palantir), are also robust against immediate disruption.
• Narrow-scope automation firms (e.g., UiPath) face more risk, but broad sector selloff is “the most disconnected sell off… I’ve seen in my history on [Wall Street] going back to late 1990s.” [13:10]

The Role of Geopolitics in Tech Market Dynamics

• Iran conflict is amplifying volatility, but:
  “Military is going to just have to rely more and more on technology players and I think that’s playing out.” – Dan Ives [14:09]

Anthropic, OpenAI, and Government Relations

• Recent Pentagon designations for Anthropic (likened to Huawei) create uncertainty for IPOs and business models.
• “You’re not digesting that over a cabernet over the weekend.” – Dan Ives [15:54]
• Unlikely to see an Anthropic or OpenAI IPO in 2026.

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3. Commercial Real Estate: Recovery and Opportunities

Segment Start: [17:29]
Guest: Lauren Hochfelder, Head of Global Real Estate Assets, Morgan Stanley

Recovery Signs in Commercial Real Estate

• Hochfelder is bullish: “I absolutely think the worst is behind us. … there’s pretty clear evidence [the bottom] has formed … public markets, private capital formation, we’re feeling pretty good.” [18:01]

Debt Markets and Lending

• Lending for real estate up 30% YoY, with even banks re-entering office lending.
• “Debt markets are wide open… perhaps most interestingly… they’re even lending to office.” – Lauren Hochfelder [18:35]
• Construction lending is lower, which is healthy after a period of excess supply.

Macro Risks and Real Estate’s Relative Value

• Despite geopolitical risks and volatility, real estate values remain about 20% below peak, presenting an attractive entry point amid falling capital costs and inflation tailwinds.
• “When you put aside all of the noise, I think the relative value proposition for real estate is really strong.” – Lauren Hochfelder [20:08]
• Real estate is highlighted as a natural inflation hedge with durable cash flow.

High-Conviction Strategies: Industrial, Data Centers, Senior Housing

• AI is driving demand for data centers and, by extension, industrial property.
• Senior housing is a key focus:
  “The 80+ population in this country is growing at nearly 5%... and they control more than 50% of the wealth.” – Lauren Hochfelder [21:45]

The Future of Office Space

• Work-from-home debate is waning—people are back in high-quality office spaces.
• New debate involves whether office jobs are migrating to remote locations/data centers.
• B and C class office space likely faces conversion or demolition; private and public sector cooperation needed for viable transitions.

Morgan Stanley’s Longevity in Real Estate

• “We have an extraordinary team and… the combination of a global perspective… but amazing local teams. And real estate is fundamentally a local business.” – Lauren Hochfelder [23:42]

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Notable Quotes & Timestamps

• “They threw up the gates, as they like to say…” – Brian Chapata [03:12]
• “Nobody really cares about liquidity until they do. And when they do, it can be kind of what we’re seeing today.” – Brian Chapata [07:13]
• “That’s like me saying in two years I’m going to be in pole vault in the Olympics in LA.” – Dan Ives [11:24]
• “Military is going to just have to rely more and more on technology players…” – Dan Ives [14:09]
• “Debt markets are wide open… even lending to office…” – Lauren Hochfelder [18:35]
• “The 80+ population… is growing at nearly 5% … That is a lot of demand for senior housing.” – Lauren Hochfelder [21:45]
• “We have an extraordinary team… And real estate is fundamentally a local business.” – Lauren Hochfelder [23:42]

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Segment Timestamps

• BlackRock and Private Credit: [02:33] – [08:21]
• Tech Stocks & "Ghost Trade": [09:45] – [16:06]
• Commercial Real Estate Outlook: [17:29] – [23:51]

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Takeaways

• BlackRock’s move to limit withdrawals signals new stress in private credit—mainly a liquidity mismatch rather than outright credit losses, for now.
• Cascading effects may appear if forced sales multiply, broader warning for alternative asset vehicles.
• In tech, analyst sentiment remains bullish on core platforms and cybersecurity, dismissing doomsday AI narratives as overblown.
• Commercial real estate is generally seen as past the worst slump, especially in key growth niches like industrial, data centers, and senior housing.

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Transcript

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[D]

One of the undercurrents out there in the marketplace is credit quality, particularly in the private credit business. We've been reading stories over the last several weeks and months, including Blue Owl for Example, there's another about some credit tightness there and some concerns there. Then BlackRock. Today, BlackRock curbed withdrawals from its HPS corporate lending fund after client requests for redemption spike. I wasn't expecting BlackRock, that is such a high quality name. I was not expecting to see the blackrock come into this conversation. But let's get the latest reporting there. Brian Chapata joins his managing editor of Leveraged Finance and Distressed Debt for Bloomberg News. Brian, talk to us about what's happening in the private credit market here today. Are these cockroaches as Jamie Dimon suggests, or is this something now maybe a little bit more systematic or systemic?

[A]

Well, you know, I think you talked about at the jump you weren't expecting necessarily BlackRock and you know, one of the big things that BlackRock has been pushing into is private markets and is private credit. So this HPS fund is one of the major funds that it acquired as part of its acquisition last year of HPS Investment Partners. So what you are seeing here in this fund is 9.3% withdrawal requests. And they have stated in their language, as many of these private credit funds do, if we reserve the right to halt redemptions at 5% if they become too overwhelming for us because we can't really sell our assets. So they threw up the gates, as they like to say, and as a result, investors aren't getting the full money back that they expected. We'll see if that continues and if it does, that will be something that will play out over the quarters to come.

[B]

Brian, you know, BlackRock saying that this step is in line with its existing management of liquidity, as they put it. Are investors buying that? Is the street buying that?

[A]

Yeah. Well, one of the things that we've kind of observed on the private credit team here at Bloomberg is that even just as recently as this week, Blackstone opted to meet all investor redemption requests even though it was 7.9% in excess of that 5% threshold. They were allowed to go all the way up to seven. And then they also actually put some of the firm's money and some of the employees own money into kind of offsetting the withdrawals. So for a long time we have not seen any asset manager actually say we are limiting withdrawals because it's not a good look necessarily if you can't get your full money back. But it is, as they said, kind of part of why you got into private credit in the first place is illiquidity. Get paid for that.

[D]

So Brian, what is the is there or put it this way. Is there a consensus building as to whether there really is a systemic problem credit problem in private credit?

[A]

Well, right now it's kind of a liquidity problem, right? There's a mismatch, I think, between maybe some of the retail investors that got into these products that that kind of expect that if they want their money back, they can get their money back and do something else with it. So I think this has to all play out. And I think the question that everyone's asking is will there eventually be kind of a liquidity problem? Become, you know, kind of there's a feedback loop, right? Like if there's for selling, then prices go down, that hurts returns and that necessitates kind of, you know, people wanting to pull their money more and it becomes this kind of very negative feedback loop. We kind of saw this with, with commercial real estate a few years ago when, when the Fed was hiking rates. So we have to see how this cycle plays out and whether it continues in the coming months and quarters and everything.

[B]

Any read across through the broader credit space? I know that for instance, in publicly traded credit markets, spreads have been quite favorable at the beginning of this year, and we've seen a lot of issuers benefit from that. But now that we're seeing more jitters in the private credit space, is that something that you expect to ripple across the rest of the market as well?

[A]

It's a really good point. I mean, some of these private credit vehicles have leveraged loans, which are. Which are kind of more publicly traded, broadly syndicated in their. In their portfolios, so that they have some sort of liquidity. So we are actually seeing some evidence of this trickling out into the other, more like risky lending markets, where a lot of managers are selling what they're able to and selling what's easy, and that's actually hitting loan prices a little bit more than we might expect. Even though those loans are relatively higher quality and are generally doing fine, investors are kind of trying to get liquidity where they can. And so they're kind of selling the stuff that they're able are private.

[D]

Are fund managers, are they out there in the market trying to raise capital for private credit funds? I would think this would be a tough time.

[A]

They are still. I think it was Dan Loeb who came out recently and said he was, he was actually raising a bdc. There are pockets of fundraising that are still working, but I do think that's obviously a fair question. There's been this big obviously push into retail for one case, private markets, and it comes at perhaps not the most optimal time as there's kind of a reassessment of of risk and kind of liquidity. Nobody really cares about liquidity until they do. And when they do, it can be kind of what we're seeing today.

[B]

Yeah. Well, are we seeing also any signs of stress given what's happening in a broader space with Iran conflict at this moment, how does that going to play private credit and credit markets broadly?

[A]

Yeah, it's still, I would say early days as far as the spillover effects. But obviously there are a lot of borrowers out there that are exposed to commodity prices, for example. And so I think those are some of the markets where you're seeing the most dramatic moves as a result of the conflict in Iran. So something that I think the credit markets have been watching pretty closely. But for now it was mostly just the markets kind of just really quieted down quite a bit as everybody kind of assessed what was happening and how long the conflict might be going on. So I think we'll see that maybe next week or the week after as some of these big deals come down the pike.

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[D]

us live on YouTube stuck a little technology stocks here. Here's Here's a note from a recent analyst who says investors are now navigating an uncertain Iran military conflict in the Middle east, adding to the nervousness already in the tech trade with the ghost with the AI ghost trade and anthropic worries abound. The author of that note is Dan Ives, global head of technology research at Wedbush securities here. Dan, love to get your thoughts. Dan. He's somewhere in the swamps of Jersey. I don't know where he is right now. But what is the ghost trade, Dan, and how's it impacted tech stocks?

[E]

Yeah, look Paul, I mean the ghost trade, it goes back to the anthropic worries that's crushed software this year. You know, in terms of cybersecurity software that these elements are going to replace the software layer. And I'd say to some extent it's also been a huge overhang in names like Microsoft, but we continue to view it. It's a good trend. I think last week's anthropic event earlier in the week will be the star of a bottoming event. I think we've already seen it in software and I think it's a fictional tale. Okay. A fairy tale. The anthropic is going to replace software.

[B]

Yeah. Well I'm sure, Dan, that you've read the Citrini Report from a couple of weeks ago that really sparked some of these worries or continued to stoke these software worries. What's your take on that scenario? Are you in a camp that it's too much doomsday, especially because they were calling for this to or rather it was a hypothetical scenario that they were potentially seeing play out as as soon as 2028. But what are your thoughts around that?

[E]

I mean that's like me saying in two years I'm going to be in pole vault in the Olympics in la. You could be like, I mean look, I get teach its own, but I believe we're in the early days of an AI revolution and what's going to be a secular tech bull market? Look, I get the jitters, the white knuckles that we're going through in terms of the goose trade words about Capex, obviously the Iran conflict war, which is adding to that. But it just speaks to my view. This will also pat these are going to be opportunities to own the core tech winners in a revolution where the US for the first time in 30 years is ahead of China when it comes to tech.

[D]

Dan, as it relates to risk or potential risk to software, is there a way to differentiate ones that are maybe more at risk versus less at risk?

[E]

Yeah Paul, I think it's a great point. Look, I think first off the most disconnected of all software is cybersecurity. Like when I look like nothing is replacing the and to some AI just increases the surface area and the miles are going to have to be protected. Crowdstrike, Palo Alto Checkpoint zscale I think that's probably one of the areas that I think is a huge misnomer. And then you look at like the salesforces, the servicenows, the Microsoft, like nothing is replacing that layer and that data. Palantir would be a good example. Even when you look like everything that's happened with Anthropic and the Pentagon it's just going to increase the ability for Palantir less reliant. It's a plug and play. In terms of the models are there companies like UiPath, some others that have maybe more one trick pony business models that could be disintermediate. Yeah but you can paint them all at the same brush and that's why this is the most disconnected sell off that I've seen in my history on Wash going back to late 90s.

[B]

Yeah, well done. I know that you've also written recently about how the tech trade and the developments in that space connects to the broader macro environment that we're seeing. Obviously the Iran conflict driving a lot of price action this week. What are your thoughts around that then? How does this, this new catalyst kind of further upend what we're seeing in the tech space at the moment?

[E]

Look, I think right now investors are trying to put pieces of the puzzle together and the puzzle keeps getting thrown apart. Right. In terms of other risk and other fears. I think at the end of the day you take a step back. The anthropic fears, the ghost trade that is way disconnected in terms of what I see happen in software and just broader tech. The capex dollars are going to continue to increase and even though you're going through these jitters, that's not going to stop that, that that's going to continue to accelerate. I think when you look what's happening, you know, with, with Iran conflict and war and what this is doing, look to some extent military is going to just have to rely more and more on technology players and I think that's playing out. We've talked about like our top 10 names like there's Names like Planet Labs. There's names like Voyager, you know, of course, like, you know, safety tech names, cybersecurity names like Palantir. I think tech investors need to navigate this uncertainty, but own the winners. And you cannot get caught on what's still the long term thesis that we're less than a third of the way through.

[D]

Dan, last question. 30 seconds left. The boat. How do you put into context the anthropics and the open eyes and some of the discussions they've been having with the government, government, particularly the Pentagon, about how technology is used.

[E]

Look anthropic, like they touched the third rail essentially. Right now they're trying, I think, starting to backtrack and some of the apologies, but you cannot tell the government. And I think there needs to be guardrails. And I think OpenAI and Altman's talked about and others that work with the government. But I think for them, like it got them into very precarious situations, supply chain risk and others. And it's a cautionary tale, right, in terms of what's happening and others will gain from that opportunity. But look, this is, we're going into unprecedented territory. But I think anthropic, like last Friday night, that was, I think that was a black eye situation that they're trying to navigate.

[D]

Are we going to get anthropic and open IPO in 2026?

[E]

Look, I think it's one where I'd be surprised if that happened. 2026. I mean, you're about SpaceX and others.

[D]

Yeah, yeah.

[E]

But this, when you get supply chain designation like that from the Pentagon, which essentially is the same as Huawei. Yeah, that's. You're not digesting that over a cabernet over the weekend.

[D]

Stay with us. More from Bloomberg Intelligence coming up after this.

[A]

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[D]

Let's get talk to the real estate business. We always like to talk about the commercial real estate business because we're in New York City just with amazing real estate here in town. And we have Morgan Stanley. We've talked about this before. Lauren Hochfelder, head of global real estate assets at Morgan Stanley. As long as I've been in this business, since the mid-80s, it's been Morgan Stanley, really the leaders in the investment banking side of real estate and the ownership of real estate. Lauren, thanks so much for joining us here. Is the worst behind us here, do you think?

[C]

Thank you for having me, first of all. And yes, I absolutely think the worst is behind us. I think we talked the last time we were together that it felt like a bottom was forming. And I think today there's pretty clear evidence it has formed clear evidence on the ground. When we look at public markets, when we look at private capital formation, we're feeling pretty good.

[B]

Yeah. Well, Lauren, I think one of the things that you cited as part of this improvement process is the fact that the cost of capital is falling. Right. And debt markets also more favorable to real estate borrowers. How durable do you think that development will be?

[C]

Yeah, so debt markets are wide open. Real estate lending last year was up 30% and across categories. So even the banks are back. And I think perhaps most interestingly, you know, in the beginning it was sort of a pretty narrow subset of what lenders would lend to. Today they're even lending to office. And so, you know, they say when the corpse has a pulse, you can that you can infer what's going on in the market.

[D]

All right. So as I understand it, we have a housing shortage in this country. Let's say I'm entrepreneurial, I want to build a multifamily community out there or some type of property. Where am I going to get the capital to do that?

[C]

Yeah. So look, real estate lending is absolutely back for multifamily in particular, certainly a bit less on the construction lending side and I think for good reason. So in the US in particular, what ends every cycle, it's new supply. Right. Rents run, values run and builders build. It is a very efficient supply side response and we saw a lot of excess supply this time around. So fortunately we've seen a real pullback

[B]

in that what could upend this development here, the fact that it is on the rise. I mean, we have seen a few macro stories unfolding this week that are quite major. And so is any of that kind of a potential halt or that could potentially stop the recovery that we've seen so far in real estate?

[C]

Look, the perspective matters and I look across Morgan Stanley's real assets business. We own real estate assets, infrastructure assets, equity, credit, etc. And so we have a really global perspective. And I would say, of course, course, all of this geopolitical risk has massive implications. The difference perhaps is that whereas the broader investable universe is at all time highs and facing a lot of volatility in the public markets, real estate values are still down roughly 20% as you look across the world. And so you have a really attractive entry point. You have as you reference cost of capital going down and you have new construction down. So when you put aside all of the noise, I think the relative value proposition for real estate is really strong. And when you think about the flow through risks created by some of this geopolitical, these dynamics, it's inflation, it's a risk off appetite. And what do we know about real estate? Real estate is a pretty effective inflation hedge and it tends to be a lower risk asset class with durable cash flow, among other things.

[D]

When you say one of one of your high, higher conviction real estate strategies is industrial, does that include this, the data center thing or is that something different?

[C]

So data centers tend to be adjacent to industrial. We do invest in data centers as well, in particular in our infrastructure business. But I'd say when you look actually AI is really impacting both data centers and industrial.

[B]

Yeah, well, one of the things that you're looking at as well in terms of high conviction areas of senior housing, what's been the trend there?

[C]

Yeah, well, look, in investing you have knowns and unknowns and one thing we know for sure is that our population is getting older and with that our housing needs change. So the 80 plus population in this country is growing at nearly 5% against a backdrop of the overall population dead flat. And so we have a lot of growth in that segment. And by the way, they control a lot of the wealth in this country. They control more than 50% of the wealth. So you have a lot of them with a lot of money. That is a lot of demand for senior housing. And we're seeing across our portfolio a lot of growth.

[D]

All right, before we let you go, just office.

[C]

Mm.

[D]

If I want to go buy an office building on 3rd Avenue on 48th Street. What should my bid be relative to like the last transaction? Am I coming in at a 50% discount? 30%? Or is that thing already cleared? Maybe.

[C]

Well, here's what's so interesting is we debated for years, including here with you, the sort of return to office trend.

[B]

Right.

[C]

Would work from home just decimate office? Unfortunately, I think that debate is over. People are back in the office. But now what you're seeing is this new debate of the office scare.

[D]

Right?

[C]

And are we are all the jobs going from 3rd Avenue and 47th street to Data centers in God knows where, we still think that the highest quality office will really prevail.

[D]

So that A plus story that's still to play. What are we doing now for the B and C? Does that stuff just clear at a price? Does it get torn down like.

[B]

I don't know.

[C]

I think that there is going to be a reasonable amount of conversion. Okay, so there's demand destruction and there are higher and better uses of these pieces of clay. That's just the reality. Now we need the private and public sector to come together to make those economically viable.

[D]

So why is Morgan Stanley so good have been forever in real estate? Is it just you've had a commitment through cycles that maybe others didn't?

[C]

We have an extraordinary team and we have the combination of a global perspective.

[B]

Right.

[C]

And being part of Morgan Stanley. The best economists in the world, the best global perspective, but amazing local teams. And real estate is fundamentally local business.

[D]

Yep.

[B]

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