US Stocks: Carlyle private credit fund bleeds out amid industry-wide investor exodus

Carlyle's flagship private-credit interval fund has been hit by a wave of redemptions, according to a shareholder letter seen by Reuters on Thursday, as an investor exodus over fears of a looming downturn in the sector ‌continues.

A spate ⁠of ⁠credit issues in recent months has intensified scrutiny of the multi-trillion-dollar private credit ​market, as investors question the health of loan portfolios and borrowers' ability to withstand ​higher interest rates.

The Carlyle Tactical Private Credit Fund, or CTAC, received repurchase requests amounting to roughly 15.7% of outstanding shares.


Several asset managers ​have capped redemptions at the standard 5% ⁠quarterly limit ‌after a recent surge in withdrawal requests. Morgan Stanley, ​BlackRock ​and Apollo Global Management, among others, have imposed such limits ⁠in recent weeks.

Shares of Carlyle were last down ​2.7% in morning trading. The company said the fund ​has 950 positions and no single credit is more than 1.5% of the portfolio. A spokesperson added that the CTAC does not have fixed allocations for asset classes the way some other funds do.

Concerns that AI could erode software companies' earnings and ‌weaken their ability to repay loans are spreading through private credit - a key lender to the technology sector - prompting ​investors to ​reassess exposure, redemption ⁠risks and fundraising prospects, analysts said.

These concerns have triggered a sharp selloff this year in the shares of alternative asset managers.

According to the ​CTAC's website, direct lending was the fund's primary focus as of January 30, with software accounting for the largest share of the portfolio at 12.7%, followed by financial services at 8.4% and healthcare at 7.9%.