Morgan Stanley caps withdrawals at private credit fund as redemptions surge

Morgan Stanley Investment Management told investors it has restricted redemptions in its semi-liquid private credit fund after withdrawal requests pushed the fund's quarterly five-percent cap to eleven percent in the second quarter. The bank cited « our obligation to safeguard the fund's stability and the value of undistributed assets » in the letter.

The fund holds a portfolio of direct corporate-borrower loans and was considered a pioneer of semi-liquid private credit structures open to individual investors. Wells Fargo private capital strategists project that an eight-percent redemption quota will be paid in tranches by the end of the third quarter, with the remainder pushed into the first half of 2026.

On the regulatory side, SEC Commissioner Hester Peirce called the withdrawals « a natural part of the maturation of the retail channel in private credit », though the FDIC dissented with a view calling for stricter standards. Comparable products from Apollo, Ares and Blackstone fell three to five percent after hours.