Morgan Stanley Private Credit Fund Redemption Requests Remain Elevated in Third Quarter

Morgan Stanley’s North Haven Private Income Fund continued to face elevated investor withdrawal requests in the third quarter, underscoring ongoing liquidity pressure across the private credit market.

Investors sought to redeem 11.4% of the fund’s shares in the latest repurchase offer, according to a regulatory filing on Friday. That was slightly below the 11.6% requested in the previous quarter, but still more than twice the 5% of shares the fund will repurchase under its customary quarterly limit.

The North Haven Private Income Fund, which has roughly $7 billion in assets, has therefore continued to restrict the amount investors can withdraw. Such limits are common among non-traded private credit vehicles and are designed to prevent managers from being forced to sell assets quickly when redemption demand rises.

Investor concerns have focused in part on lending standards and the ability of software companies to withstand disruption from artificial intelligence. Software businesses represent an important borrower group for direct lenders, making the rapid development of AI an area of particular attention for private credit investors.

However, the latest figures also contain signs that redemption pressure may be stabilizing. Nearly two-thirds of the requests in the latest quarter came from investors whose earlier redemption requests had not been fully satisfied during the previous two repurchase periods.

Morgan Stanley’s fund said that after completing the latest repurchases, investors who sought to fully redeem their holdings during the previous two periods will have received more than 80% of the amount they originally requested. The fund expects its net asset value to decline by roughly $101 million after accounting for new subscriptions and dividend reinvestments.

A smaller Morgan Stanley vehicle, the North Haven Private Income Fund A, also recorded elevated withdrawal demand. Redemption requests represented about 6.8% of its shares, down from 7.2% in the previous quarter. Like its larger counterpart, the fund will repurchase 5% of its shares.

Morgan Stanley’s experience reflects broader developments across the private credit industry. Blackstone’s flagship private credit fund also received redemption requests of around 10% of outstanding shares in the third quarter, while managers continue working through requests that were not fulfilled in earlier periods.

The latest Morgan Stanley figures suggest that while redemption demand may be easing from earlier peaks, investors are still seeking greater liquidity from private credit funds. Data from major funds operated by Apollo, Ares and Blue Owl is expected to provide further insight into the direction of withdrawal pressure across the industry.