Increased investor withdrawals are escalating on the private lending market, driven by a surge in requests for the repurchase of shares within the Cliffwater Corporate Lending Fund. According to individuals familiar with the situation, investors have sought to withdraw over seven percent of the fund’s approximately $33 billion capital. Consequently, the company must now determine the precise amount of capital it will return during the current share redemption period.
The fund operates under an interval structure, requiring the manager to purchase up to five percent of total shares quarterly when withdrawals are requested. This limit can be temporarily increased to a maximum of seven percent. The deadline for a decision is Tuesday, and it remains uncertain whether withdrawals will be restricted to five percent or permitted to reach the seven-percent ceiling.
This situation coincides with heightened scrutiny of the $1.8 trillion private lending market, particularly concerning credit quality and exposure to software companies potentially impacted by rapid advancements in artificial intelligence. Cliffwater dismisses these concerns, asserting that the pressure on sales stems primarily from investor sentiment rather than actual portfolio issues. In November, the fund received an A credit rating from S&P Global Ratings, citing diversified investments, low leverage, and stable asset and cash flow quality.
Similar pressure for withdrawals is emerging across other funds in this sector. BlackRock recently capped withdrawals from its HPS Corporate Lending Fund at five percent after investor demands nearly doubled. Blackstone, conversely, authorized a record withdrawal of 7.9 percent from its Blackstone Private Credit Fund (BCRED), supplemented by investments from the company and its leadership to mitigate the capital outflow.
The Cliffwater fund’s operations focus on corporate lending.
Topics: #cliffwater #corporate #lending
