Carlyle’s CG-Q flagship private-credit interval fund has been hit by a wave of redemptions, according to a shareholder letter seen by Reuters on Thursday, as an investor exodus over fears of a looming downturn in the sector continues.
A spate of credit issues in recent months has intensified scrutiny of the multitrillion-dollar private credit market, as investors question the health of loan portfolios and borrowers’ ability to withstand higher interest rates.
The Carlyle Tactical Private Credit Fund, or CTAC, received repurchase requests amounting to roughly 15.7 per cent of outstanding shares.
Several asset managers have capped redemptions at the standard 5-per-cent quarterly limit after a recent surge in withdrawal requests. Morgan Stanley MS-N, BlackRock BLK-N and Apollo Global Management APO-A-N, among others, have imposed such limits in recent weeks.
Shares of Carlyle were last down 2.7 per cent in morning trading. The company said the fund has 950 positions and no single credit is more than 1.5 per cent of the portfolio. A spokesperson added that the CTAC does not have fixed allocations for asset classes the way some other funds do.
Concerns that AI could erode software companies’ earnings and weaken their ability to repay loans are spreading through private credit - a key lender to the technology sector - prompting investors to reassess exposure, redemption risks and fundraising prospects, analysts said.
These concerns have triggered a sharp selloff this year in the shares of alternative asset managers.
According to the CTAC’s website, direct lending was the fund’s primary focus as of Jan. 30, with software accounting for the largest share of the portfolio at 12.7 per cent, followed by financial services at 8.4 per cent and healthcare at 7.9 per cent.