BlackRock worries markets by limiting the redemption of one of its flagship funds

BarcelonaBlackRock has limited redemptions from one of its flagship private debt funds, setting off alarm bells. Its subsidiary HPS, acquired last year, has received redemption requests for 9.3% of the assets in one of its credit funds, which has $26 billion (approximately €22 billion at the current exchange rate). As reported by the world's largest asset manager, only redemptions corresponding to 5% of this fund will be honored. Until now, BlackRock had approved 54% of redemption requests in the first quarter, totaling $1.2 billion, and HPS has informed its investors that it will only redeem another $620 million. This decision by Larry Fink's firm has caused its stock price to fall by 7.1% and has unsettled a market that has been showing signs of concern for some time. More specifically, BlackRock's move comes after another asset manager, Blue Owl, suspended redemptions from one of its funds last month, putting the private credit market on alert. This type of fund has boomed in the United States but doesn't exist in Europe. The BlackRock fund's case is the clearest example of redemption limits being imposed among major private credit funds since this trend began late last year. At that time, caution began to grow among investors in these assets. Many firms had previously opted to grant the largest redemption requests or seek other ways to repay capital. Funds that lend money to companies are common in the US. The interest rates they apply are usually higher than those offered by banks and the private debt market (bonds). The return for investors is higher, but so is the risk. Recently, concerns have arisen about the potential impact of artificial intelligence on these instruments. It is estimated to be a market worth the equivalent of over 1.6 trillion euros.