Morgan Stanley has limited withdrawals from its $7.6 billion North Haven Private Income Fund after redemption requests hit 10.9 per cent of its assets in Q1 2026.

In the latest sign of growing unease around private credit funds, the bank will honour only 45.8 per cent of the requests made in the first three months of the year, in line with the semi-liquid nature of the product.

Private credit lender Cliffwater has also restricted withdrawals, approving repurchases of 7 per cent of the fund’s shares – only half of the 14 per cent requested by investors.

The limits come only days after the world’s largest asset manager, BlackRock, limited withdrawals from its own private credit fund after requests hit 9.3 per cent for the quarter.

Private credit funds can offer large returns, but they are often tied to underlying assets that are illiquid, meaning shares are not instantly tradeable. Total withdrawals are capped at 7 per cent per quarter under US Securities and Exchange Commission rules.

The broader private credit market is facing intense scrutiny after a number of fund managers warned of its risks in recent days.

Glendon Capital Management, a US-based distressed debt investment firm, told investors earlier today that private credit lenders are obscuring weaknesses in their portfolios, the Financial Times reported.

The chair of European private capital group Partners Group warned earlier in the day that private credit default rates may double “in the next few years”, driven by AI’s impact on software companies.

Morgan Stanley has also warned of instability as AI use in the workplace grows, reporting in January that over 200,000 European banking jobs could be lost to the technology in coming years.

JPMorgan announced yesterday that it was marking down the value of certain loans in private credit lenders’ portfolios, limiting how much the bank is willing to lend against them.

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