Morgan Stanley caps private credit exits again as 11% want out

[NEW YORK] Morgan Stanley is curbing redemptions at its nearly US$7 billion private credit fund again in the third quarter, as investors requested more than twice the amount the fund was willing to repurchase.

The North Haven Private Income Fund capped withdrawals at 5 per cent after investors asked to pull 11.4 per cent of shares, largely unchanged from the three months prior, according to a shareholder letter on Friday (Sep 18). 

The fund said completed repurchases across three periods through September will total about US$479 million. Nearly two-thirds of the requests came from investors whose previous withdrawal requests had been limited in the prior two repurchase offers, according to the letter.

While redemption requests at major funds have largely declined in the most recent quarter, they remain elevated as investors persist with efforts to pull cash from the US$1.8 trillion market.

That has led Morgan Stanley to join many of its peers, including Blackstone and BlackRock, in continuing to limit the amount of money investors can get out.

Managers are still working through a backlog of about US$15 billion of withdrawal requests after a record rush for the exits in the past year, following concerns around underwriting standards and lenders’ exposure to vintage software investments.

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A smaller Morgan Stanley fund with less than US$1 billion in total investments also curbed redemptions after receiving requests to redeem around 7 per cent of shares. BLOOMBERG