Over $7 billion was pulled out of top private credit funds at the end of last year. Big investors are done waiting around. The two major bankruptcies of First Brands and Tricolor have made everyone nervous, as both companies were stacked with loans and asset-backed debt arranged by banks. Funds managed by Apollo, Ares, Barings, Blackstone, Blue Owl, Cliffwater, Oaktree, and BlackRock’s HPS have all taken a hit. The data, from SEC filings, shows redemptions surging across the board. Most are sitting around 5% of the fund’s net value after debt. But it won’t stop there. More reports are coming in the next few weeks. Executives say the total will be higher. And since the private credit market is worth $2.3 trillion, if confidence keeps falling, it will almost definitely trigger a crash in publicly traded stocks. On Friday, the S&P 500 slipped by 0.06% and closed at 6,940.01, the Nasdaq Composite inched down by 0.06% to settle at 23,515.39, and the Dow Jones Industrial Average fell by 0.17% to end at 49,359.33. Then you have Jamie Dimon, the boss at JPMorgan, ominously warning that:- “When you see one cockroach, there are probably more.” Demand had already started slowing. The Fed signaled rate cuts were coming. Lower rates mean lower returns, especially for funds holding floating-rate loans. Some funds slashed their dividends. That spooked people even more. Most of the pressure has landed on non-traded BDCs and interval funds. These are the main entry points for retail and high-net-worth investors into private credit. Normally, managers can cap withdrawals at 5% each quarter. But many funds are letting people pull out more than that. Trump’s 10% interest rate cap plan triggers more fears While Wall Street deals with investor flight, President Trump has lit a new fire by pushing for a 10% interest rate cap on credit cards. The warning signs came fast. The Electronic Payments Coalition ran the numbers and said 82% to 88% of cardholders would lose their cards or see big limit cuts. That’s millions of Americans. The worst hit? People with credit scores under 740. The EPC says that’s 175 to 190 million people who’d either lose their cards or face serious limits. Jeremy Barnum, the CFO at JPMorgan, told investors this would wreck access to credit. “People will lose access to credit, like on a very, very extensive and broad basis, especially the people who need it,” he said. Barnum added that:- “This could have a severely negative consequence for consumers and, frankly, probably also a negative consequence for the economy as a whole.” And yes, the bank would feel it too. “We wouldn’t be in it if it weren’t a good business for us.” Cliffwater earlier said that it was “not worried about our ability to perform, knowing that we have a lot of liquidity behind us and we think quarter on quarter things will get better.” Between collapsing companies, rising redemptions, rate cuts, and now the card cap fight, the credit market is getting hammered from every side. There’s no telling what comes next. But for now, Wall Street is watching people walk out the door. If you're reading this, you’re already ahead. Stay there with our newsletter .
