Apollo Global just hit the brakes on withdrawals from its flagship private credit fund for the third quarter in a row.
They're capping redemptions at 5%. Investors wanted 15%.
This isn't a small fund having liquidity issues. This is one of the world's largest asset managers telling clients "you can't have your money back right now."
Private credit has been the hot trade for years. Illiquid, higher yields, perceived safety because it's "private." But illiquidity cuts both ways. When everyone wants out at once, there's no secondary market to dump into.
The gap between what investors want (3x the cap) and what Apollo will allow tells you something about either:
1) Underlying asset stress
2) Redemption queue building up
3) Both
This is worth watching. Private credit has ballooned to nearly $2 trillion. If redemption gates become the norm across the industry, it could ripple into broader credit markets and equity valuations tied to leveraged buyouts.
Liquidity is fine until it isn't.
They're capping redemptions at 5%. Investors wanted 15%.
This isn't a small fund having liquidity issues. This is one of the world's largest asset managers telling clients "you can't have your money back right now."
Private credit has been the hot trade for years. Illiquid, higher yields, perceived safety because it's "private." But illiquidity cuts both ways. When everyone wants out at once, there's no secondary market to dump into.
The gap between what investors want (3x the cap) and what Apollo will allow tells you something about either:
1) Underlying asset stress
2) Redemption queue building up
3) Both
This is worth watching. Private credit has ballooned to nearly $2 trillion. If redemption gates become the norm across the industry, it could ripple into broader credit markets and equity valuations tied to leveraged buyouts.
Liquidity is fine until it isn't.
