Apollo extends gating on private credit fund into third quarter

The liquidity crunch in private credit has now persisted for three quarters, with Apollo restricting redemptions from its main retail private credit fund for another three months.

On Tuesday, the fund told investors that it would fulfill only 5% of the 14.7% of shares they requested to redeem. The fund has now capped withdrawals for at least nine months.

This capped payout is intended to avoid a rush of redemptions, similar to the gating measures already in place during the first two quarters.

Shares in the private credit sector have kept falling. Apollo's stock is down 14% year-to-date, while the S&P 500 has gained 12% over the same period.

Other private credit firms have also lagged their benchmarks this year: Blackstone fell 22%, Ares dropped 24%, KKR lost 23%, Carlyle declined 33%, and Blue Owl slid 36%.

The Apollo Debt Solutions BDC is a retail private credit fund with a $25.9 billion portfolio of senior secured loans.

In Q1, investors sought to redeem 11.2% of shares, but the fund indicated they would receive roughly 45 cents for each dollar requested.

In Q2, redemption requests were for 16.8% of shares, yet only 5% was honored.

Apollo has given its quarterly 5% cap a corporate-sounding label. The firm calls the restriction “Quarterly Liquidity: Considered & Intentional.”

Redemption requests for private credit continue to mount

Cliffwater's $31 billion Corporate Lending Fund also restricted redemptions to 5% this month after investors requested around 16%.

That was the fund's third straight quarter of withdrawal caps.

Blackstone likewise capped redemptions this quarter. Its $77 billion BCRED private credit fund limited Q3 withdrawals to 5%, as requests were approximately twice that amount.

BlackRock's HPS Corporate Lending Fund received requests for 11.5% of shares, but will only allow 5% to be redeemed this quarter.

In August, Apollo sought to present the situation more positively to the press, estimating that many redemption requests were simply carryovers from earlier quarters.

For apparent relief, withdrawal requests were not increasing in recent months. “The vast majority of third-quarter requests reflect investors re-tendering unfulfilled requests from prior quarters,” the company claimed.

Apollo also pointed to other positive metrics. The firm stated it had $200 million in gross subscriptions for the quarter and a net total return of 8.2% since inception.

Across the industry, Fitch analysts estimated the US private credit default rate hit a record 6.3% for the year through August 2026.