Redemption wave hits $2 trillion private credit, industry warns of cross-border risk transmission

Once regarded by international giants as a “revenue booster,” U.S. private credit products are undergoing an unprecedented stress test. Since 2026, private credit products under leading institutions including Blackstone, BlackRock, Morgan Stanley, and Oaktree Capital have repeatedly approached redemption limits, with the contradiction between mismatches on the funding side and the asset side being concentratedly exposed. Based on the views of multiple institutional sources, the main pressures on the U.S. private credit market in 2026 come from two aspects. First, the pressure comes from artificial intelligence (AI) disrupting the business models of software companies. Second, the pressure is the rising proportion of PIK (payment in kind or deferred interest), which has become a hidden risk behind paper gains. A team led by Duan Chao, Chief Macro Analyst at Industrial Securities, believes the probability that risks in U.S. private credit will evolve into a systemic financial crisis is relatively low. Zhang Xia, Chief Strategy Analyst at China Merchants Securities, reminds that in the future, four areas should still be watched: whether redemption pressure will further expand, the mutual transmission of AI bubbles and private credit risks, the risk that high oil prices lead to a shift in Federal Reserve policy and higher interest rates, and the degree to which private credit penetrates the banking system. (China Securities Journal)