Private Markets Alert Newsletter

✍️ Op-Ed: The Bill Comes Due

This week private credit moved from stress narrative to stress fact. Moody's downgraded FS KKR Capital Corp to junk, citing non-accruals at 5.5% and PIK income running at more than twice the sector median. Within 48 hours, Ares restricted redemptions in its $10.7 billion fund after withdrawal requests hit 11.6% — joining Apollo, Blue Owl, BlackRock, and Cliffwater in gating retail investors who had been sold illiquidity as a yield feature rather than a risk.

Goldman Sachs projects a 20–30% hit to retail private credit product values over two years from outflows alone. By Q2 or Q3 this year, more than 80% of semi-liquid funds are projected to be in net capital outflow. As UBP's Nicolas Roth noted, the adjustment period will separate platforms with structural liquidity buffers from those relying on subscription momentum to finance exits.

Simultaneously, regulators are moving in the opposite direction: the FDIC rescinded its 2009 ban on PE buying failed banks, and SEC Commissioner Uyeda declared private assets "not only acceptable, but desirable" for 401(k) investors. The infrastructure enabling the next phase of retail access expansion is the same infrastructure currently experiencing its first stress test.

🤝 Top Deals:

• Moody's cut FS KKR Capital Corp to Ba1 — junk territory — on non-accruals of 5.5%, a Q4 net loss of $114M, and PIK income at 14.7% vs. a peer median of 6.3%. FSK shares are down 31% YTD.

• Ares gated redemptions at 5% after withdrawal requests hit 11.6%, the latest in a wave of restrictions across major semi-liquid private credit vehicles.

• The FDIC unanimously rescinded its 16-year-old policy barring PE from acquiring failed banks, opening resolution auctions to nonbanks for the first time since the 2008 crisis.

• Asia-Pacific PE fundraising hit a 12-year low of $58B in 2025, with Middle Eastern SWFs now pausing outbound commitments amid regional geopolitical disruption.

• A BSP survey found 59% of LPs expect integrated public/private credit management within five years, up from 35% today, driven by shared borrowers and overlapping risk profiles.

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