Ouyang Xiaohong/Text

When a private credit fund tells investors that its assets are still "valued at net worth" but can only retrieve cash at a rate of 5%, the market may be losing trust, not just liquidity.

In the spring of 2026, the problem with private equity lending in the United States is "how much value it really has will only be seen when someone is about to leave. Blue Owl (Blue Cat Head Eagle Private Credit Investment Company) disclosed in early April this year that the redemption applications of two retail oriented private credit funds in the first quarter reached 40.7% and 21.9% respectively, and were ultimately processed at a quarterly limit of 5%.

On Monday (April 6th), Blue Owl's stock price fell and closed at $8.45, hitting a new low in historical closing prices. Due to Blue Owl's high credit exposure to software borrowers, it is more susceptible to the impact of artificial intelligence (AI) risk reassessment narratives, and the public market is viewing Blue Owl as a representative target for betting on continued pressure on US private credit.

At the same time, a private credit fund under Barings, a global asset management company with alternative assets at its core, has also initiated redemption restrictions due to a surge in redemptions. Redemption restrictions were originally part of the terms of private credit products, but as they continue to appear in top institutions, the market's perception of liquidity commitments for this asset class will change.

Does this invisible 'run' imply that US private lending may rewrite the next round of global risk pricing? Meanwhile, it is worth noting that the ultimate bearers of risk have quietly shifted from bank balance sheets to funds, insurance, and wealth management products.

New Cracks in the 'Post Lehman Era'

Signs of cracks have appeared. On March 30th, Federal Reserve Chairman Powell said that the Fed is closely monitoring the private credit sector in the United States, but has not seen any signs that could bring down the entire financial system. On April 6th, JPMorgan CEO Jamie Damon stated that private credit may not pose systemic risk, but once the credit cycle weakens, losses may be higher than expected, and transparency and valuation issues may amplify selling impulses.

The most common mistake the market makes is always trying to identify this round of risk using the outline of the previous crisis. So, will the risk of private equity credit in the United States evolve into the 'next Lehman crisis'?

The typical risk structure in 2008 was high leverage on bank balance sheets, nested securitization chains, and pressure on payment and clearing systems; And today's pressure on private equity credit is more like risk moving from banks to outside of banks. According to a study by the Federal Reserve in 2025, as of the second quarter of 2024, the size of private credit assets in the United States is approximately $1.34 trillion, and globally it is close to $2 trillion; As of the first quarter of 2024, large US banks have committed approximately $56 billion in credit to BDC (Business Development Companies, specialized in gathering private credit resources for various small and medium-sized enterprises). Banks are still in the chain, but they are more like connectors and leverage providers rather than the only ultimate risk warehouse.

That's also why 'net worth looks stable' is not enough to reassure the market. A large number of private loans do not trade continuously like public bonds, but rely more on models, quarterly evaluations, and non-public comparable assumptions to price. Normally, this mechanism makes portfolio volatility appear smooth, but once investors truly want to exit, the question becomes: what price, at what time, and to whom can they sell?

Why Now

Private equity credit is facing dual pressures from both macro environment and micro fundamentals.

In terms of macro environment, conflicts in the Middle East have pushed up oil prices, and inflation stickiness has returned to the market's perspective. In early April, Jamie Damon warned that conflicts in the Middle East could bring oil prices and commodity shocks, making inflation more stubborn and interest rates higher than the market had originally imagined. Meanwhile, institutions such as Morgan Stanley, Goldman Sachs, and Barclays Bank have generally postponed their expectations for the next Fed rate cut to around September 2026. For private equity lending, the real danger lies in the prolonged high interest rates. Because it means that borrowers who rely on floating rate financing will have to bear high cash interest burdens for a longer period of time; The story of relying on refinancing to extend one's life also faces more expensive, difficult, and even unsustainable risks.

But the current pressure on private equity lending in the United States is not just about macro interest rates or fund liquidity issues. The deeper background is the long-term pursuit of high returns by the capital side, which drives capital to continuously flock to high valuation and high volatility tracks such as software and AI. In recent years, in a low interest rate and high liquidity environment, the demand for "high-yield, low volatility, and alternative to the public market" products has continued to rise, and private credit has been expanding in this process, gradually taking on more risks outside the banking system. In a sense, it does have the shadow of the Internet foam in 2000: capital first bet on narrative, and then use narrative to raise valuation and financing capacity.

Goldman Sachs research believes that the current AI boom is "similar to the Internet foam in 2000, but it is not a simple replay" - the market has been partially overheated, and the valuation and capital expenditure are more radical. However, the leading companies that dominate AI themes have stronger earnings and cash flow bases, so they are more like "local foam or foam signs", rather than a replay of the overall Internet foam.

More specifically, the issue is highly focused on the most sensitive sector - borrowers in the software industry.

In the past few years, software companies have become one of the preferred borrowers in private equity lending due to their high gross margins, subscription income, and narrative of "light assets and high cash flow"; But now, AI is changing this narrative. At present, the private equity credit industry is facing increasing concerns that AI may erode the profit models, pricing power, and debt paying ability of some software companies, and software is precisely the core risk exposure in private equity credit portfolios. In other words, what the market is worried about now is not just whether the economy will slow down, but whether the borrower's business model itself is being revalued.

It is worth noting that just one day before the redemption pressure drew market attention, Blue Owl announced on March 31, 2026 that its "Asset Special Opportunity Fund IX" would ultimately raise around $2.9 billion, exceeding the previously set target of $2.5 billion. Unlike products with quarterly liquidity arrangements, this type of fund targets institutional investors, has a longer lock up period, emphasizes asset support, opportunity based allocation, and downside protection. For the market, this indicates that the current problem with private equity lending in the United States is not whether funds are leaving the market as a whole, but where funds are leaving and flowing back.

The coexistence of redemption restrictions and excessive fundraising in Blue Owl reflects the re stratification of capital within private equity credit: from semi liquid, retail oriented, and enterprise credit oriented products to more closed, institutionalized strategies that emphasize asset support and downward protection.

From this, it can be seen that Blue Owl's redemption restrictions, stock price decline, and repricing of AI risk for software borrowers are collectively driving up the industry risk premium.

Market Leading Signal

A truly mature market observation never just focuses on statements, but also on prices, terms, and behavior. The true revaluation often occurs first in the financing conditions, rather than in the manager's monthly net worth.

There seem to be signs of redemption restrictions evolving into an industry phenomenon. Two private equity credit funds of Blue Owl encountered redemption applications and were ultimately redeemed at a quarterly limit of 5%; Baring has also followed up and implemented similar redemption restrictions. Previously, several large institutions have also experienced redemption restrictions or near redemption limits. Redemption restrictions do not automatically mean losing control, but once they begin to appear simultaneously in multiple top institutions, they are no longer just "normal terms in product design", but rather a reminder to the market that liquidity commitments for the entire asset class are being repriced.

In addition, the public market has expressed unease. The stocks of listed commercial development companies and alternative asset management institutions have been under pressure first. Once the open market continues to discount commercial development companies, it essentially means that their net book value may be good, but it does not represent the redeemable price under real liquidity conditions. The secondary market is challenging the valuation narrative of the primary market with discounts.

The bank financing side has also begun to change its face. Large banks in the United States have begun to tighten their loan support for private credit funds. Banks are very practical and need to calculate discount rates, advance rates, and financing spreads. When banks begin to believe that related assets are more difficult to dispose of, their value is more uncertain, and the refinancing environment is more fragile, they will express their judgment with higher prices, shorter maturities, and stricter collateral requirements. For professional investors, the information density of such signals is often higher than a comfort letter written to an LP (investor).

According to a study by the Bank for International Settlements in March this year, private equity loans to SaaS (Software as a Service) companies have risen to over $500 billion, accounting for approximately 19% of total direct loans; Amid concerns that AI may impact traditional SaaS business models, software stocks have fallen and business development companies have deepened their discounts.

The breach has not disappeared, it has only been postponed for confirmation. At the end of March, it was reported that private lending institutions were allowing some borrowers to delay cash payments and accept more lenient terms to avoid loans being immediately flagged as defaults. Because of this, such risks often do not clear out instantly like in the open market, but first manifest as: bad news has not yet fully entered the price, but financing conditions have already changed.

Who is taking on the risk

In this structure, what regulators and investors need to correct the most is not whether they acknowledge the risks, but whether they are still using the coordinate system of the previous crisis to screen for this round of risks.

The implication of Powell's statement and Jamie Damon's judgment is that currently, the related risks have not yet entered the stage of losing control at the level of bank capital.

If the risk of the Internet foam in 2000 was mainly exposed to the equity market, the risk vulnerability is now embedded in the non bank credit chain such as private credit, business development companies, insurance and wealth products. This round of risks may not be the same as the Internet foam in those years, which first erupted in the public stock market, but more likely along the chain of "valuation lag - financing tightening - redemption rise - default rise", and gradually transmitted within the non banking system.

If private equity credit risk is not just the appearance of AI foam, the excessive expansion of AI narrative is exposing the cracks in this non bank credit system faster.

That's also why the current risk structure is not exactly the same as in 2000 or 2008. When the Internet foam burst in 2000, equity valuation was the first to bear the brunt; The outbreak of the 2008 financial crisis first led to the loss of control over bank capital and securitization chains; This time, what is even more alarming is that the high valuation financing, high-yield allocation, and non bank credit expansion driven by AI storytelling are collectively forming a more covert and difficult to quickly clear risk transmission mechanism.

Some analysts believe that this is not the 2008 financial institution capital crisis. Currently, it is more like an opaque, non silver, and undervalued credit market, undergoing a stress test in an environment of higher interest rates and AI revaluation. It may evolve into an important credit risk event, but it is more like a "multi-point outbreak" from the second half of 2026 to 2027: first, the default rate of software and service borrowers will rise, then to the continuous redemption restrictions of retail private credit products, and then to see if the risk will be amplified through financing chains such as banks, insurance, and loan backed bonds. Morgan Stanley stated that the annualized default rate of private equity credit may reach 8% from the second half of 2026 to the first half of 2027, which is no longer a 'no problem' but a substantial credit deterioration.

According to data from Crunchbase, a global startup financing data business information platform, in the first quarter of 2026, global startups raised approximately $297 billion, of which AI related financing accounted for about $240 billion, or approximately 80%. This means that global AI investment and financing have not cooled down, are still accelerating, and funds are becoming more concentrated. Furthermore, AI financing is still clearly concentrated in top US companies and a few ultra large transactions, which makes it easier for the impact of the AI boom to be transmitted to the US private credit market through valuation reassessment, credit tightening, and decreased risk appetite once it turns.

In this way, the cracks in US private equity credit, or the early signs of overheating in the equity market, software credit reassessment, and non bank financial fragility overlapping after the AI capital boom entered the second half. Private credit risk is not the root of the problem, but it may be the first scene where AI foam begins to transmit to risk pricing.

The world spent over a decade repairing banks, but the market is only now beginning to realize that new cracks may lie outside of the banks.