Sieg Stands by Private Credit as Withdrawal Requests Surpass Caps and BDC Prices Lag

Andy Sieg, Citi's wealth management head, stated that the bank continues to endorse private credit for clients. Redemption demands at non-traded private credit funds are considerably exceeding the normal 5% quarterly ceilings.

These vehicles, called business development companies (BDCs), provide loans lasting multiple years yet permit periodic withdrawals. Consequently, some clients are unable to withdraw their entire investment.

Does Citi's Private Credit Confidence Align with Market Pricing?

Speaking on CNBC's Halftime Report, Sieg characterized private credit and private equity as long-term building blocks rather than tradable assets.

He remarked that clients commit for 10 to 30 years, so the critical factor is whether a diligence team has thoroughly checked each manager.

“clients have been happy with the returns that they’ve had”

Andy Sieg, head of Citi Wealth, on CNBC

At the same time, many listed BDCs are trading at a 10% to 20% discount to their reported asset values, according to Valuation Research data.

The preliminary data also show that requests at 11 of the 14 largest non-traded BDCs averaged 13.0% in the third quarter, down from 13.9% in the second. Even so, that level remains far above the typical 5% cap.

In an October blog, the International Monetary Fund (IMF) flagged private credit as a possible amplifier of market stress. It said that borrowers could tap committed direct-lending credit lines if conditions tightened, putting pressure on fund liquidity.

What Part of Citi's Wealth Expansion Is Organic?

Wealth management revenue has increased for ten straight quarters. The year-on-year gain in the third quarter was 15%.

A record $38 billion in fresh client money, what Citi calls net new investment assets, arrived in the quarter. Existing clients accounted for most of it by transferring more holdings to the bank, Sieg wrote in a memo.

Net interest income advanced 20% while noninterest revenue rose 5%, Family Wealth Report data showed. Consequently, deposit income contributed more to the growth than investment fees.

Still, Sieg said organic flow growth, which excludes market gains, topped 10%, though he did acknowledge the role of market tailwinds.

How clients react to withdrawal limits may reveal whether private market assets remain core positions on wealth platforms.