Blackstone told shareholders Thursday that BCRED will honor only 50% of the 10% redemption requests submitted for the period, the same treatment investors got last quarter. Among funds in this category, BCRED ranks as the biggest. For BCRED, those investors who requested redemptions during the past two quarters will have gotten roughly 75% of their proceeds in about 90 days. At the start of the year, Blackstone executives even put in their own money to help meet requests.
This year, BCRED's net asset value has eased lower, marking $24.68 at January's end and $23.64 as of the close of July. For investors getting redeemed this quarter, the payout will be calculated using the NAV as of the end of the September quarter.
The fund says its annualized return since inception sits at 9%, exceeding the performance of leveraged loans by almost 3 percentage points over the same timeframe. In its letter, BCRED said, "BCRED remains well capitalized, and loan repayments and inflows have outpaced shares repurchased."
Blackstone also told investors that institutional demand for private credit broadly is still strong. In the first half of the year, BCRED invested more than $6 billion and is prioritizing opportunities in life sciences, alongside AI, digital infrastructure, and the aerospace and defense sector.
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This is another pressure check on a $1.8 trillion private credit market that has spent much of the year defending its underwriting and its exposure to older software names. Investors in non-traded BDCs like BCRED have been getting in line to cash out, then getting back in line, and Blackstone's update suggests those exit requests will stay higher than usual. Even as fresh requests ease, managers still need to work through roughly $15 billion of pending withdrawals. So far, funds point to a relatively small share of troubled loans as proof worst-case scenarios have not hit.
Publicly traded BDCs have perked up, with the S&P BDC Index up about 10% from a multiyear low earlier this year. But fundraising for non-traded BDCs is way down, falling about 82% this year as some investors drift toward other options amid the prospect of softer returns. Translation for your wallet: private credit is still deploying capital and posting steady numbers, but if you want out, the lines are longer and managers are busy clearing them.
