- BCRED has a $82 billion portfolio, diversified across 700 positions.
- Evercore ISI said that investors were not anticipating redemption requests approaching 8% and it expects the group will face "a challenging trading session”.
- Goldman Sachs noted that Blackstone reported flow trends across a number of Wealth products, including that BCRED.
Blackstone shares were down nearly 5% on Tuesday after its $82 billion Blackstone Private Credit Fund (BCRED) disclosed a rise in redemption rates. The fund is diversified across 700 positions.
BCRED’s first-quarter (Q1) redemption requests totaled 7.9% of the outstanding shares, up from 4.5% in Q4.
“Total repurchase requests for the quarter exceeded the 5% of shares typically available for repurchase. The Board elected to upsize the offer to 7% of shares, the maximum amount permitted without changing the terms of the repurchase offer,” the company said, according to a regulatory filing. The firm is meeting requests by stepping in, alongside employees, to offset the remaining 0.9%.
Troubles In Private Credit
The private credit industry has been seeing a rise in redemption rates across several funds over fears about the asset class, as well as its exposure to software businesses, which are at risk of AI-related disruption.
Blue Owl last month permanently stopped allowing redemptions from Blue Owl Capital Corp. II, a semi-liquid private credit fund marketed to U.S. retail investors, abandoning its earlier plan to reopen withdrawals later this quarter. The firm said it would begin returning investor capital.
Analyst Take
Evercore ISI analyst Glenn Schorr said in an analyst note that Blackstone's perpetual, non-traded BDC, BCRED, reported rise in redemption rate for Q1 compared to Q4, and BCRED will fulfill 100% of requests this quarter, even though repurchases exceeded both the 5% tender offer and the subsequently upsized 7% cap, as per TheFly.
The firm said investors were not anticipating redemption requests approaching 8% and it expects the group will face "a challenging trading session”. Schorr further added that BCRED, the "category leader in private credit," has "effectively raised the bar for all the other non-traded BDCs," narrowly avoiding the potential backlash associated with gating redemptions. Evercore ISI kept an ‘Outperform’ rating and $170 price target on Blackstone shares.
Goldman Sachs noted that Blackstone reported flow trends across a number of Wealth products, including BCRED. The firm expects that net flows for Retail Private Credit vehicles could deteriorate further into Q2, given lower prospective returns and "considerable negative media coverage on this topic," the analyst told investors, as per TheFly.
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Shares in the company have fallen 32% over the past year.
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