The asset manager Apollo Global Management is under pressure after its $15 billion semi-liquid credit fund recorded massive redemption requests. Investors sought to withdraw shares amounting to 11.2%—more than double the permitted quarterly limit of 5%. The firm announced it would fulfill less than half of these requests, effectively paying out only around 45% of the requested amounts. The development is seen as another signal of growing tensions in the private credit market, following earlier issues at other major providers. Across the sector, parallels to previous financial crises are emerging, while the share prices of major financial institutions have declined significantly since the start of the year.
At the center of the criticism is the valuation practice of many funds. Until just a few months ago, numerous loans were internally valued at close to full value, even though market observers now expect significantly lower recoveries. Estimates from within Apollo’s environment suggest that some of these claims may be worth only 20 to 40 cents on the dollar. At the same time, institutions continue to publicly emphasize the stability of their portfolios. The scale of the market amplifies the risks: major financial firms such as BlackRock, Blackstone, KKR, JPMorgan Chase, and Deutsche Bank collectively manage assets of around $22 trillion, equivalent to roughly 18% of global economic output. A further escalation of the problems could therefore have significant systemic consequences.
To stabilize the situation, so-called secondary markets are increasingly being used, where investors can sell their holdings at steep discounts. Critics argue this mainly shifts losses and delays the true revaluation of assets. As long as sales are avoided, official valuations remain stable even though the underlying loans have lost value. Experts warn that rising liquidity demands could trigger genuine price discovery, forcing substantial write-downs and intensifying the crisis. Overall, the developments suggest that turbulence in private credit markets is still at an early stage and may continue to spread.