Private Credit News Weekly Issue #85: BlackRock Marks Down 19%, Redemptions Hit 5%, and Secondaries Explode to $226 Billion
BlackRock marks down 19%, redemptions hit 5%, and managers race for $13 trillion in 401(k)s
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Private credit’s valuation problem just got public. BlackRock TCP Capital marked down its NAV 19% to between $7.05 and $7.09 from $8.71 and waived a third of its management fee. E-commerce aggregators and home improvement lenders from the pandemic boom are producing the losses everyone said wouldn’t come.
The stress is spreading. Redemptions hit 5% at Blackstone’s BCRED, Blue Owl, and Ares BDCs as returns collapsed to 6.22% from 11.39% two years ago. Blue Owl’s tech fund saw 15% redemptions, mostly from Asian clients. The firm broke its own 5% gate to allow 17% withdrawals, borrowing money to flush everyone out at once rather than managing a multi-quarter bleed.
Conflicts between lenders and their portfolio companies are landing in court. Planet Networks sued Post Road Group, alleging the private equity firm dangled a $50 million loan to steal trade secrets for competing portfolio company Archtop Fiber. The lawsuit claims Post Road slow-rolled due diligence, extracted competitive intelligence, then denied Planet access to utility poles when it tried to escape by repaying the $12 million bridge loan.
The secondaries market tells a different story. Volume surged 41% to $226 billion as EQT bought Coller Capital for $3.2 billion, with Jeremy Coller personally receiving $2.3 billion. Buying existing loans at discounts beats originating new ones at 450 bps on deteriorating credits.
None of this slowed the retail push. Private credit firms launched 41 evergreen funds targeting $13 trillion in 401(k) assets. Interval fund assets jumped to $92.7 billion from $15 billion in 2020. OneDigital is partnering with Blackstone, Apollo, and Ares to incorporate private credit into adviser-managed 401(k) portfolios just as spreads compressed 100 bps to 450-475 bps and CCC- borrowers hit 64, a record for the sixth straight quarter.
Key Market Themes
1. BlackRock TCP Marks Down 19% as BDC Pressure Mounts
BlackRock TCP Capital expects to cut its net asset value per share to between $7.05 and $7.09 for the quarter ended December 31 from $8.71 as of September 30, a 19% markdown. The fund struggled from exposure to e-commerce aggregators, companies that buy and manage Amazon sellers, as well as troubled home improvement company Renovo Home Partners, which filed for bankruptcy with plans to liquidate.
BlackRock said it has waived one-third of its management fee for the quarter. The vehicle is a business development company that pools together private credit loans and trades like a stock. BDC shares have been hit over the past year, with investors concerned over private credit returns, underwriting standards, and increased regulatory scrutiny.
BlackRock TCP had a market capitalization of about $497 million as of Friday’s close. The fund has been a component of BlackRock’s private credit offering since the asset manager acquired Tennenbaum Capital Partners in 2018. Shares of BlackRock TCP fell as much as 8.4% in post-market trading.
Why It Matters
The 19% markdown at a BlackRock-owned BDC signals valuation pressure is real, not theoretical. When managers start waiving fees to cushion the blow, that’s not confidence in portfolio quality. That’s damage control. E-commerce aggregators and home improvement were trendy sectors during the pandemic lending boom. Now they’re producing the losses everyone said wouldn’t materialize.
2. Redemptions Surge to 5% Across Major BDCs
Several of the biggest private credit funds eligible to wealthy individuals received redemption requests from about 5% of shareholders at year-end, well above normal volume. One fund managed by Blue Owl got redemptions for about 15% of its shares, primarily from Asian clients.
Redemptions hit 4.5% at Blackstone’s BCRED, about 5% from Blue Owl’s largest fund, and 5.6% from an Ares BDC. Total returns from five of the largest private credit funds aimed at individuals declined to an average of about 6.22% in the first nine months of 2025, compared with 8.76% in the same period of 2024 and 11.39% in 2023.
Blue Owl announced it would raise the redemption threshold on its technology BDC to 17% from the typical 5% cap, borrowing money to retire shares. The idea was to flush all shareholders who wanted out in one fell swoop, avoiding the cycle of redemptions that weighed down Blackstone’s real-estate fund for years when it fell from favor. About 15% of the technology BDC’s investors took Blue Owl up on its offer.
Why It Matters
When Blue Owl breaks its own 5% gate to allow 17% redemptions, that’s not generosity. That’s preventing a multi-quarter exodus. The technique only works as long as a fund has cash or can borrow more to fund payouts rather than liquidating investments. Once funds start selling assets to meet redemptions, marks get tested. The comparison to Blackstone’s real estate fund Breit isn’t comforting. That became a black eye for Blackstone and never returned to peak size.
3. Lawsuit Exposes Conflict of Interest in Digital Infrastructure
Planet Networks thought it had landed a $50 million private credit deal to finance the fiber internet company’s push into New York’s Hudson Valley. Instead, its founder says Wafra-backed private equity manager Post Road Group dangled the loan to access trade secrets while its own competing startup tried to swoop into the region.
Planet accused the Connecticut-based manager and its co-founder Michael Bogdan of misrepresenting their involvement in Post Road portfolio company Archtop Fiber, founded only months prior, and using the pretext of an investment in Planet to steal competitive information and stall growth plans. Post Road provided a $12 million bridge loan in January 2023 and committed to $50 million in long-term debt.
According to the lawsuit, Post Road slow-rolled its potential investment and used “bait-and-switch tactics” to steal trade secrets including sensitive information related to permitting maps, technologies, business opportunities, and vendor relationships. That helped Archtop expand into the Hudson Valley. While Planet knew Post Road had committed hundreds of millions to Archtop, the private equity firm represented itself as a “mere passive” investor.
Why It Matters
As more private equity investors with their own portfolio companies become lenders, the potential for conflicts has grown. The lawsuit alleges Archtop, which acquired control of Warwick Valley Telephone, a local utility pole company, denied Planet access to poles needed for network expansion. When Planet tried to pay off its bridge loan, Post Road demanded an “exclusivity breakage fee” and sought to rip away Planet from its founder. Private credit pitches privacy as a virtue. Now it’s spilling out in court in a rare public rebuke within digital infrastructure investing.
4. Secondaries Market Surges 41% to Record $226 Billion
Secondary deal volume for private assets surged 41% to a record $226 billion in 2025 as higher interest rates stifled dealmaking and the return of cash to investors. Distributions as a percentage of NAV remain historically low in Europe at around 20% versus a 10-year average of 28%, according to PitchBook.
EQT agreed to buy Coller Capital for $3.2 billion to gain a foothold in the booming market. The transaction will be funded through newly issued EQT shares with up to $500 million in contingent consideration to be financed in cash if certain targets are hit. EQT said the deal is expected to be “mid-single-digit accretive” to its fee-related earnings.
Coller announced the final close of its largest-ever fund earlier this month after raising $17 billion. It had $50 billion in assets as of September 30. Jeremy Coller, chief investment officer and managing partner, will become head of the newly branded Coller EQT. The transaction will crystallize a ten-figure windfall for Coller, who is set to receive about 72% of the base consideration, or some $2.3 billion.
Why It Matters
“Rather than making blunt allocation shifts, LPs can use the secondary market to reduce concentration risk and free up capital in a more targeted way,” said Michael Aldridge, Global Head of LP Portfolio Analytics at Carta. Secondaries deals help investors exit positions that sponsors can’t or won’t liquidate, mainly due to valuations mismatches or because managers want to hold assets beyond the original sell-by date. Fund manager-initiated transactions continue to increase, now representing a substantial portion of total volume.
5. Evergreen Funds Rush to Capture $13 Trillion in 401(k) Assets
Private credit firms launched 41 evergreen funds dedicated to private credit last year, according to Preqin. These vehicles are designed to offer individual investors options to cash out periodically, in contrast with closed-end vehicles that typically catered to institutional buyers and locked up capital for a set amount of time.
US credit interval vehicles held about $92.7 billion of net assets in Q3 2025, up from about $15 billion in 2020, according to Cliffwater. The new funds come on the heels of President Trump’s executive order last year designed to open up 401(k)s to assets including private equity and credit. Firms are waiting for guidance from the Labor Department, which has until early February to publish a proposal.
Historically, evergreen structures were mostly launched by smaller private credit firms or wealth managers. But last year, Blackstone, KKR, and Blue Owl all launched interval funds, suggesting these vehicles have moved firmly into the strategies of the $1.7 trillion private credit market’s bigger players. Firms are also teaming up with retirement plan sponsors. Blue Owl partnered with Voya Financial to bring products into retirement accounts, while Blackstone struck agreements with Vanguard and Wellington Management.
Why It Matters
OneDigital, which advises companies on their 401(k) plans, is partnering with Blackstone, Apollo, and Ares to incorporate private equity and private credit into some adviser-managed portfolios. The firm’s clients will review these allocations and decide whether to offer them to employees. More than 70% of 401(k) participants were invested in equities at the end of 2023. “Not only is there high concentration among the top five or seven stocks but those stocks are highly correlated and predominately in tech,” said Raj Dhanda, global head of wealth management at Ares.
6. Asset-Backed Finance Emerges as Growth Driver
Asset-backed finance will be a key engine for private credit growth this year, as demand for funding in capital intensive sectors exceeds what traditional banks have the risk appetite to provide, according to Moody’s and KBRA. Lending secured by assets and repaid from cashflows is becoming “the new frontier for private credit,” said Marc Pinto, global head of private credit at Moody’s.
The role of private credit in financing asset-heavy sectors such as data centers and digital infrastructure has soared while the ability of traditional banks to lend in some areas remains limited. Moody’s predicts global private credit assets will exceed $2 trillion this year and approach $4 trillion by the end of the decade, with asset-backed financing a primary driver.
KBRA noted the “significant growth” opportunity that asset-based finance poses for private credit but warned managing a diversified ABF portfolio requires asset-level expertise that not all managers possess. KBRA has already seen concentration limits being tested or breached because of outsized allocations to volatile sectors such as aviation, corporate receivables, and certain consumer finance sectors.
Why It Matters
Tricolor Holdings demonstrated the importance of due diligence. The founder of the bankrupt subprime auto lender was charged with alleged fraud late last year, as prosecutors said executives double-pledged auto loan collateral and manipulated descriptions of loans. “Tricolor was an asset-backed lending dilemma. It demonstrated the importance of due diligence, while the collateral, allegedly cross-pledged, opened the door for bad actors to engage in potentially unethical practices,” said Zain Bukhari of S&P Global Market Intelligence.
7. Spreads Compress to 450-475 Bps as Credit Quality Deteriorates
Spreads in US direct lending have compressed roughly 100 bps over the past year to 450 to 475 bps, according to Moody’s. “Tighter spreads and loosening terms show both sides are fighting harder for the same deals,” said Alexandra Aspioti, a vice president of private credit at Moody’s.
With interest rates easing over the past two years, the broadly-syndicated loan market has reclaimed some market share from direct lenders as borrowers seek lower-cost financing. The growth of the CCC- rated borrower bucket, often considered the core of direct lending, ticked up at the end of the year, pointing to mounting stress and the potential for more defaults in 2026.
By the end of Q4, the tally had climbed to 64 from 61 at end of September, marking the sixth consecutive quarter of increases, according to KBRA. The firm projects a half-percentage point increase in the default rate by volume next year. “Across the landscape, there are blinking lights -- as in, that risk in that context did not exist two years ago,” said Bill Cox, chief ratings officer at KBRA.
Why It Matters
PIK levels have risen steadily for BDCs over the last five quarters, with median PIK income ratios climbing from around 5% in Q1 2022 to over 8% for perpetual non-traded BDCs by Q3 2025, according to Moody’s. The compression in spreads while credit quality deteriorates and PIK increases reveals the competitive pressure. Managers are accepting worse terms on riskier credits to deploy capital and earn fees.
Deals of Note
OneStream - Hg in discussions with Goldman Sachs Alternatives and Blue Owl for roughly $3B annual recurring-revenue loan to help finance $6.4B acquisition alongside General Atlantic and Tidemark
Covetrus - CD&R and TPG in talks with Blue Owl and others to line up at least $2.5B of debt to refinance roughly $2B existing debt and fund potential acquisition, pricing expected at least 500 bps over benchmark
Databricks - Lined up $1.8B of new financing from BSL and private credit lenders, increased delayed-draw term loan to $1.15B from $500M, boosted revolver to $3.65B from $2.5B, pricing at 450 bps over SOFR, total debt now $7.05B
Blue Raven Solutions - Fortress leading $500M private loan to refinance existing debt at military supply-chain company
The Reality Check
BlackRock waiving fees on a 19% markdown reflects broader industry pressure as pandemic-era underwriting gets stress-tested. Redemptions hitting 5% while returns dropped from 11.39% to 6.22% shows the retail investor base responding to underperformance the way retail always does.
Blue Owl raising its gate to 17% demonstrates creative liquidity management: flushing redemptions in one quarter rather than managing a multi-year cycle. The approach requires substantial cash or borrowing capacity, but it’s a cleaner reset than the prolonged pressure Blackstone’s Breit experienced. Whether other funds can replicate the tactic depends on their balance sheets.
The Planet Networks lawsuit alleging Post Road leveraged loan negotiations to benefit competing portfolio company Archtop highlights structural tensions as private equity firms expand into lending. When capital providers own competing assets, relationship-based underwriting faces conflicts that standard covenants don’t resolve. The case may reshape how PE-lender conflicts are managed industry-wide.
Secondaries hitting $226 billion while EQT pays $3.2 billion for Coller shows where institutional capital sees opportunity. Coller raised $17 billion for its largest fund, and Jeremy Coller receives $2.3 billion from the sale. The returns in secondaries increasingly outpace primary origination as LPs prioritize liquidity and price discovery over new commitments.
The retail distribution push through 41 evergreen funds and partnerships with Vanguard, Wellington, and 401(k) advisers reflects the industry’s strategic pivot as institutional allocations slow. Interval funds growing to $92.7 billion from $15 billion in 2020 demonstrates demand for semi-liquid structures. The question is whether these vehicles can deliver the liquidity promised when redemptions accelerate beyond 5% thresholds.
Asset-backed finance positioning as the growth engine makes strategic sense given spread compression in direct lending to 450-475 bps. But managing ABF requires operational expertise in aviation, receivables, and consumer finance that differs from sponsor-backed corporate lending. KBRA already seeing concentration limits tested suggests not all managers possess the capabilities they’re marketing.
The private credit value proposition always rested on three pillars: covenant protection, relationship access, and underwriting discipline. Recent market behavior shows all three under pressure. Spreads compressing 100 bps while CCC- borrowers hit 64 for six straight quarters and PIK rises from 5% to 8% reflects competitive intensity overwhelming selectivity.
Returns normalizing from 11% to 6% while public markets rally tests whether the illiquidity premium still justifies the positioning. Private credit remains a viable asset class with institutional demand. The challenge is whether performance can support the distribution ambitions as managers push into retail channels just as returns moderate.
The Tricolor case underscores why asset-backed lending can't rely purely on covenant protection. When collateral gets double-pledged, due diligence becomes the only real safeguard. What's interesting is how the spread compression to 450bps is happening simultaneously as CCC borrowers hit record highs. Managers are taking on more risk for less compnsation, which feels unsustainable in anymarket cycle.