Private Credit News Weekly Issue #102: One Fund Finally Stops the Bleeding
Oaktree breaks the redemption streak as the Bank of England models a downturn worse than 2008 and Apollo chases €10 billion in Europe
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For four straight months, every redemption headline ran the same direction. Investors pulled, funds gated, and the only question was the size of the cap. Then Oaktree reported something nobody else had managed all year: requests actually fell.
The firm’s $7 billion Strategic Credit Fund got withdrawal requests of 4.5%, under the 5% it offered, so it paid everyone in full. First quarter requests had hit 8.5%, back when Brookfield kicked in $80 million to help cover them. Co-CEO Armen Panossian credited the firm’s distressed pedigree. “We are synonymous with investing in a countercyclical way.” Investors who buy an Oaktree credit fund tend to want a manager that leans into a turning cycle, not one that flinches.
The relief is narrow. The Bank of England spent the week telling private markets to imagine something nastier than the financial crisis. Its first stress test of the $16 trillion sector runs a scenario where equities crater 35% in year one, a global recession hits in year two with UK GDP at -4%, and unemployment peaks at 7.5% in year three. High-yield spreads blow past 1,200 bps. Rated alternative managers get cut two notches. Nobody rides to the rescue. UK Private Capital’s Michael Moore called it more extreme in parts than 2008. Results land in early 2027.
The regulators aren’t acting alone or in isolation. The ECB nearly doubled its bank probe to 20 lenders. Australia’s watchdog told managers to ground valuations in “realistic assumptions” or face enforcement.
Apollo, meanwhile, is looking past the noise. The firm is building a €10 billion European lending platform aimed at mid-sized companies, including the ones operating without private equity sponsors that most direct lenders skip. GIC is shopping $2 billion of private credit stakes into a secondaries market that doubled to $20 billion last year. And Partners Group wrote its €1.6 billion Pharmathen bet down to zero after an FDA import alert choked off US sales, a reminder that plenty of credit blows up for reasons that have nothing to do with AI.
Key Market Themes
1. Oaktree Stems the Exodus
Oaktree’s roughly $7 billion Strategic Credit Fund saw redemption requests fall to 4.5%, below the 5% it offered, letting it meet demand in full. That’s down sharply from 8.5% in the first quarter, when parent Brookfield put in $80 million to help. No other major firm has reversed the tide this year.
“In the current market environment, we believe investors are becoming more selective in evaluating managers and portfolios,” the fund told shareholders. Panossian said the conversations Oaktree has with its investors run differently because of its distressed-investing history. The fund returned 8.8% annualized over three years, carries non-accruals of 0.08%, and holds $1.8 billion in cash and undrawn credit.
Why it cuts through
Oaktree is the first crack in the story that retail flight is universal. The firm’s distressed reputation explains most of it. People who put money into an Oaktree credit fund did so partly because they want a manager that buys when others run. That base behaves nothing like the retail buyers who got sold low-volatility yield and now want out at any cost. One fund easing doesn’t end the cycle, but it suggests who you are matters as much as how much software you hold.
2. The BOE Designs a Nightmare
The Bank of England laid out the scenario it wants private markets to model in its first stress test of the sector, and it pulled no punches. Year one: a 35% equity crash, UK inflation at 7%, high-yield spreads widening 390 bps in sterling and 490 bps in dollars. Year two: a global recession, UK GDP at -4%, spreads peaking near 1,200 bps, sterling borrowing costs around 1,800 bps. Year three: unemployment at 7.5%, a wall of refinancing needs, and rated alternative managers downgraded two notches. Firms manage it alone, with no policymaker support assumed at any stage.
Roughly 40 firms volunteered for the exercise across the $16 trillion ecosystem: managers, the banks lending to them, and the institutions funding the deals. Moore called the scenario “very severe” and in some respects worse than the GFC. In the UK, PE-sponsored businesses make up as much as 15% of corporate debt and over two million jobs. Findings publish in early 2027.
Why it cuts through
Plenty of people expected the BOE to soften the test to protect its relationships with private capital. It did the opposite, which tells you the regulator sees fragility worth dragging into the light. The harshest line in the scenario isn’t the equity crash. It’s the assumption that no one intervenes. Private credit runs on patient capital and orderly workouts. Take away any prospect of a backstop, force banks and insurers and funds to bend at the same moment, and the open question is whether the plumbing holds when everyone reaches for liquidity together.
3. Apollo Goes Shopping in Europe
Apollo is launching the European Credit Company, a platform with around €10 billion to lend to mid-sized European businesses, both sponsor-backed and standalone. The firm expects it to more than double as it scales. Giacomo Petrobelli, former CIO of Oldenburgische Landesbank, will run operations, with Apollo’s Joshua Black and financial institutions group overseeing.
The push tracks private credit’s European surge as US managers field questions about software and valuations. Apollo has talked up the region for a while, with Jim Zelter floating up to $100 billion of German deployment over the next decade. The firm already committed $6.5 billion to an Orsted wind project, €3.2 billion to RWE’s grid, and backing for EDF’s Hinkley Point C reactor. Separately, Apollo is in advanced talks with Italian internet provider Eolo over roughly €500 million to refinance €375 million of 2028 bonds and a revolver.
Why it cuts through
Apollo expanding into Europe while US retail funds gate is a calculated move toward what the US currently lacks: less software, less retail-redemption risk, and a closed-end institutional base that doesn’t bolt for the exits. Targeting borrowers without sponsors is the sharper bet. Banks walked away from that segment and most direct lenders avoid it, which leaves less competition and wider spreads. The Eolo talks show how it works in practice, a B3-rated borrower with heavy leverage turning to private credit because the public market won’t take it cleanly.
4. GIC Trims $2 Billion
Singapore’s GIC is finalizing the sale of up to $2 billion in private credit stakes, with Evercore advising. The fund has held private credit for years and wants to prune the maturing parts of its book. GIC trades secondhand stakes routinely, having moved last year to sell at least $1 billion of PE fund holdings from managers including Blackstone and Apollo.
Selling private credit fund stakes ranks among the fastest-growing corners of the secondaries market, where volume jumped to $20 billion last year from about $11 billion in 2024. Florida’s State Board of Administration offloaded $2.7 billion of private credit stakes to Banner Ridge and Pantheon last year.
Why it cuts through
GIC trimming $2 billion isn’t a fire sale. It’s housekeeping by one of the sharpest investors on earth, which is precisely the signal worth reading. When an institution this disciplined starts working maturing private credit through secondaries, the market has grown an exit ramp it lacked for years. The doubling of volume gives trapped LPs an alternative to waiting out a gate. It also prices the paper. Whatever GIC’s stakes clear at tells everyone what this stuff is worth once a manager’s NAV stops being the only number on offer.
5. Pharmathen Goes to Zero
A London-listed Partners Group fund wrote off its stake in Greek drugmaker Pharmathen after the company hit an FDA import alert that cut off US supply. “Based on the updated outlook, the implied enterprise value is unlikely to be sufficient to cover the company’s existing debt,” the firm said. Partners Group bought Pharmathen from BC Partners in 2021 at an enterprise value near €1.6 billion. CVC’s credit arm helped fund the deal, and Bain Capital Specialty Finance also lent against it.
The write-off adds to a rough stretch for Partners Group. The firm is weighing fresh money for struggling French real estate company Emeria. A short-seller attack in April and a decision to cap withdrawals from a major fund have pushed the stock down 29% this year.
Why it cuts through
Not every credit disaster traces back to AI. A regulator killed this one. An import alert turned a leveraged drugmaker into a zero, the kind of operating risk baked into every buyout regardless of sector. For CVC and Bain, it’s a fast lesson in how little equity cushion stands between a single bad event and a wipeout. Partners Group’s wider troubles, the short attack and the gated fund and the Emeria strain, show European managers catching the same valuation and liquidity pressure hitting their US peers, just running a few months behind.
6. SuperReturn Splits the Room
The mood at SuperReturn in Berlin centered on a single uncomfortable question: how do you make a bull case for private equity right now? Exits keep stalling, distributions keep sinking, and frustrated LPs are getting ready to drop sponsors that no longer earn their keep. The industry is pulling apart into top-tier firms that raise whatever they want and laggards staring at uncertain futures.
“LPs are looking with much more scrutiny at the quality of GPs,” said Pantheon’s Imogen Richards. Carlyle’s John Redett said investors want firms to pivot away from software toward the real economy, naming industrials, defense, supply chains, and energy. “The old world is the new world.” Victor Khosla of Strategic Value Partners called entire sectors “constipated,” with clearing prices nowhere near expectations. More than $200 billion of high-yield and leveraged loan debt now trades below 90 cents and above a 15% yield, much of it left over from 2021-2022 buyouts, per Oaktree’s Brook Hinchman. Aviva’s research puts the illiquidity premium on investment-grade private debt at around 115 bps, with investors now prizing liquidity and downside protection over yield.
Why it cuts through
The split running through Berlin is the same one running through private credit. Money flees the weak managers and piles into the strong, and the gap widens every quarter. Redett’s “old world is the new world” captures the rotation: after a decade reaching for software multiples, LPs want hard assets they can actually underwrite. The $200 billion stuck below 90 cents is the hangover from the cheap-money years, and it won’t clear until sellers swallow what buyers will pay. Khosla’s “constipated” line nails it. The assets are there, the buyers are there, and the price gap keeps everything jammed.
Deals of Note
Eolo - Apollo in advanced talks over roughly €500M to refinance the Italian internet provider’s €375M of 2028 bonds plus revolver
European Credit Company - Apollo launching €10B platform for European mid-sized businesses, sponsor-backed and standalone
Olympique Lyonnais - Ares close to taking control of the French football club alongside businesswoman Michele Kang
GIC secondaries - Singapore sovereign fund finalizing sale of up to $2B in private credit stakes via Evercore
Intertek - EQT landed £9.3B takeover of the British testing group
Carlyle - Kicked off fundraising for ninth flagship fund, targeting the $14.8B raised by its predecessor
Francisco Partners - Collected more than $18B for two PE funds despite buyout headwinds
The Reality Check
Oaktree stopping its bleed is the first real evidence the exodus isn’t uniform. The firm sold countercyclical expertise, and the investors who bought it aren’t the ones heading for the door. Funds that pitched low-volatility yield to retail buyers are still hemorrhaging. The dividing line forming across the industry runs straight through reputation, and Oaktree just showed which side pays.
The BOE designed a scenario worse than 2008 and told 40 firms to survive it on paper with no rescue coming. That’s a regulator deciding the $16 trillion sector has grown too big and too tangled to leave untested. The no-intervention clause is the part managers should sit with. The whole model assumes patient capital and orderly workouts that may evaporate when banks, insurers, and funds all reach for liquidity at once. The 2027 results will settle the argument one way or the other.
Apollo’s €10 billion European platform and GIC’s $2 billion sale point the same way. The disciplined money is rotating toward markets with less retail-redemption risk and building the exit ramps that didn’t exist last cycle. Europe brings institutional, closed-end capital that doesn’t panic. Secondaries bring price discovery for LPs who’d otherwise be stuck waiting out a gate.
Pharmathen at zero and the $200 billion trading below 90 cents are the overhang nobody can talk away. Some of it is software. Some of it, like a Greek drugmaker felled by an FDA letter, is just leverage colliding with bad luck. The 2021-2022 vintages built capital structures for a world that’s gone, and clearing them out runs for years, not quarters. Khosla’s right that the market is constipated. The unblocking starts when sellers stop waiting for a recovery the Bank of England is openly telling them not to count on.