Private Credit Stress Hits 2017 High as Blackstone and Blue Owl Face Redemption Pressure

Stress across the $2 trillion private credit market hits levels not seen since 2017. Blackstone's BCRED faced approximately $3.8B in withdrawal demands as redemption requests reached 7.9% of net asset value. Blue Owl funds saw investor redemption demands climb as high as 41%. Private credit default rates peaked at 5.8% in January 2026, according to Fitch data. Distressed borrowers increasingly used payment-in-kind financing to pay interest with more debt rather than cash. The total private credit asset class grew from roughly $800B in 2019 to over $2 trillion. Semi-liquid funds promising quick exits on illiquid private debt don't work when borrowers start paying interest with IOUs.