Non-Traded Private Credit Funds Faced Record Outflows
Investors pulled more capital than they invested in these funds during the second quarter of 2026.
Updated on Oct. 12, 2026 in Investing
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Non-traded business development companies (BDCs) saw a shift in cash flow as outflows eclipsed inflows during the second quarter of 2026. This trend impacted many participants in the private credit market, driven by increased withdrawal requests from shareholders.
Why it matters
The surge in redemption requests stemmed from negative headlines involving SaaS industry exposure and a prominent fund halt. This environment impacted fund liquidity and access to capital for investors seeking to exit their positions.
The 12 largest non-traded private credit BDCs processed $7.6 billion in redemption payouts during Q2 2026 against $19.1 billion in total requested withdrawals. This reflects a period where demand for capital liquidity significantly outpaced new investor contributions.
The players
Blackstone Private Credit Fund
A non-traded private credit fund that paid out $3.2 billion in redemptions during the second quarter of 2026.
Blue Owl Technology Income Corp.
A BDC that faced a redemption demand amounting to 38.1% of its assets during the second quarter of 2026.
OBDC II
A BDC that halted investor redemptions and shifted its strategy toward returning capital through asset sales.
The details
To manage liquidity during this period, funds applied a 5% quarterly cap on outstanding shares to prorate redemption requests among shareholders. When withdrawal requests exceeded available cash, some funds initiated asset sales and special distributions to facilitate capital returns. In cases where liquidity was severely constrained, such as with OBDC II, funds halted redemptions entirely and pivoted toward returning capital through the liquidation of assets.
Timeline
2022 marked the beginning of the period used for tracking BDC cash flows.
Q1 2026 saw a notable spike in redemption demand compared to earlier periods.
Q2 2026 served as the primary window where outflows exceeded inflows for tracked funds.
Q3 2026 brought a slight decline in the volume of new redemption requests.
Money Landscape
This contraction in the non-traded BDC market follows a period of heightened investor interest and rapid growth in private credit. It marks a significant shift from the peak fundraising volumes observed in early 2025.
Investors in non-traded BDCs should review their specific fund's quarterly redemption policies and current liquidity status to understand potential delays in capital access. Consult with a qualified financial or tax professional to evaluate whether your current holdings align with your liquidity needs.
The takeaway
Liquidity constraints can arise rapidly in private credit, turning typically stable investments into ones with restricted access. Monitor your quarterly fund statements closely for notifications regarding share redemption caps or changes to distribution policies.
Further reading
For more on managing portfolio volatility, visit our section on Investing.
Source note: This article includes information reported by Pitchbook.
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