Sept 4 (Reuters) – U.S. private-credit portfolio values moved further below reported cost in the first half of 2026 as market spreads widened and stress emerged among some borrowers, particularly in the software sector, a Reuters analysis found.
The analysis of regulatory filings from 44 U.S. business development companies (BDCs), which lend mainly to small- and medium-sized firms, showed their investments had a combined fair value of $92.88 billion on June 30, compared to $95.19 billion of reported cost or amortized cost.
At the end of 2025, fair value was $95.82 billion against a cost of $96.54 billion, showing BDCs were revaluing more loans.
While most broad markdowns occurred in the first quarter, second-quarter losses at several prominent BDCs were concentrated in a relatively small number of borrowers.
“In aggregate the move is still modest, but aggregate averages can hide the real story, which is dispersion. The widening is being driven by a minority of borrowers, such as over-levered horizontal software and services businesses with real AI exposure, while the bulk of the book sits close to par,” said Anant Kumar, a global investment strategist at Benefit Street Partners.
“The question for the second half isn’t whether the average drifts another 50 basis points, it’s whether that tail keeps growing,” he said.
REDEMPTION REQUESTS
Meanwhile, Blackstone’s flagship private credit fund has received redemption requests equal to about 10% of its outstanding shares so far in the third quarter, roughly unchanged from the previous three months. Analysts said the requests were largely from investors resubmitting orders that had not been fully met earlier.
The $77.2 billion Blackstone Private Credit Fund (BCRED) received about $4.3 billion of repurchase requests, compared with $4.5 billion in the second quarter. The fund said it would repurchase shares equal to 5% of its net asset value, its quarterly limit.
BCRED fulfilled roughly half of the prior quarter’s requests, leaving about $2.3 billion unfulfilled. A significant portion of that amount has been resubmitted for redemption in the third quarter, the fund said.
The carry over is complicating efforts to gauge whether redemption pressure is worsening.
TD Cowen estimates that the backlog represents roughly half of third-quarter requests, implying that new requests halved from the second quarter. RBC Capital Markets also said it continued to view the second quarter as the likely peak in redemption demand at non-traded BDCs.
BCRED recorded net outflows of about 3% of NAV so far in the third quarter, as subscriptions equal to roughly 2% of NAV partly offset the 5% repurchase limit. The fund attracted nearly $750 million in new subscriptions.
Outflows from other vehicles have also shown signs of moderating. Cliffwater Corporate Lending Fund said requests edged down to 16% of NAV, from 17%.
The ongoing pressure in wealth-focused vehicles contrasts with a recovery in institutional fundraising. Goldman Sachs said global private credit fundraising rebounded in the second quarter, with institutional funds accounting for more than 85% of private credit assets under management.
Global private credit fundraising totaled $33 billion in the third quarter through August 25, putting the period on track to meet or exceed the $45 billion raised a year earlier, Goldman said.
(Compiled by Patturaja MurugaboopathyEditing by Vidya Ranganathan and Kirsten Donovan)
