Morgan Stanley, JPMorgan turn cautious on private credit as redemptions surge

A couple of moves by Morgan Stanley and JPMorgan have become the latest sign of growing caution among major Wall Street firms over private credit, with several asset managers confronting heavy redemption requests and lenders reassessing collateral values within their lending portfolios.

Morgan Stanley’s investment management arm said Wednesday that its North Haven Private Income Fund, which holds about $7.6 billion, received quarterly repurchase requests equal to roughly 10.9% of outstanding shares but would cap repurchases at 5%, the fund’s previously disclosed limit.

“By maintaining appropriate limits on the quarterly repurchase offer, the [fund] seeks to avoid asset sales during periods of market dislocation and provide for conservative capital structure management through evolving market conditions,” the letter to investors said, according to reporting by Barron's.

The move places Morgan Stanley among a growing list of alternative asset managers that have limited withdrawals from private credit vehicles in recent months. Blue Owl and BlackRock have also restricted redemptions from certain funds, and exchange-traded funds focused on alternative asset managers have underperformed this year.

Market reaction was swift. Morgan Stanley shares slid in premarket trading following the disclosure, and several alternative-manager stocks fell. The VanEck Alternative Asset Manager ETF has fallen sharply so far in 2026.

Alongside that, CNBC and other outlets reported that JPMorgan has reduced the valuations it assigns to loans held as collateral in financing facilities to private credit firms, particularly loans to software companies. Those markdowns, reported by people familiar with the actions, lower the borrowing capacity of private credit managers that use such loans for back-leverage and in some cases may require additional collateral.

One source characterized JPMorgan’s actions as precautionary and disciplined, saying the steps were taken “rather than waiting until a crisis comes.”

Industry observers said the twin developments underscore two ways the private credit ecosystem can be strained: investor liquidity requests on the fund side, and reduced financing capacity on the lender side. Private credit — loans and credit facilities made outside public debt markets and largely to privately held companies — has grown rapidly in recent years, drawing capital from institutions and retail channels seeking higher yields than traditional fixed income.

Concerns have concentrated on certain sectors. Fund materials indicate North Haven’s portfolio had significant exposure to software companies, a segment that has seen increased scrutiny amid technological shifts and competitive pressure. Morgan Stanley’s letter acknowledged recent headwinds, pointing to a “contraction in asset yields, uncertainty surrounding the recovery in M&A and speculation on credit deterioration,” while also saying it was “optimistic that some of these pressures may soon ease.”

Read more: BlackRock curbs redemptions at HPS private credit fund as investors weigh risks

Banks’ decisions to mark down collateral values do not directly reflect realized loan losses, according to people familiar with the matter; they reflect lower market valuations that reduce how much leverage managers can access. That dynamic can amplify stress when managers face redemptions and cannot liquidate assets quickly without incurring losses.

For advisors watching the private credit market, the developments highlight the importance of understanding liquidity features and structural limits in closed-end or tender-offer vehicles. Managers have argued such funds are not designed for full liquidity because underlying investments are often illiquid, an argument now being tested in real time.