More problems in the US financial sector: two Wall Street giants limit withdrawals from investment funds

BarcelonaMorgan Stanley, one of Wall Street's giants, and the US investment company Cliffwater have decided to limit redemptions from two of their private credit funds. This double announcement comes after last week, a fund from the giant BlackRock Do the same.

The decision to limit outflows was made after investors attempted to withdraw nearly 11% of their deposits from Morgan Stanley and 14% from Cliffwater, according to a document filed with the U.S. market regulator, Reuters reports.

This adds to a string of bad news affecting the U.S. private lending market—the market for loans from investment funds to businesses in the productive economy or to other financial entities—in recent months. These types of assets, widespread in the U.S., represent a market of approximately $2 trillion. Investors are questioning the health of loan portfolios and the resilience of borrowers in a higher interest rate environment and want to withdraw their money from specialized funds.

The Morgan Stanley fund affected by the measure is called the North Haven Private Income Fund (PIF). The New York-based bank explained that limiting redemptions will help prevent asset sales during "periods of market dislocation." This is stated in a regulatory filing published Wednesday, which shows that the institution returned approximately $169 million, or about 45.8%, of redemption requests for the quarter. "As marketed and in accordance with the disclosure in our private placement memorandum, we will honor tender requests for 5% of the outstanding units as of December 31," the bank's investment management division said in a letter to investors. The bank asserted that "the dispersion between the strongest and weakest credit is increasing." As for Cliffwater, the redemptions occurred in one of its main funds, worth $33 billion, according to the British newspaper. Financial TimesThe company was one of the fastest-growing funds in recent years, thanks to attracting money from high-net-worth individuals and private investors. In 2025, it raised approximately $16.5 billion and had specialized its now-affected fund in the private lending sector. Finally, the company has approved returning half of the withdrawal requests to investors.

In an interview with the same Financial TimesSteffen Meister, president of Partners Group—an investment fund specializing in debt, infrastructure, real estate, and capital markets with a $185 billion asset portfolio—has predicted that defaults on private corporate loans could double in the near future. Currently at 2.4%, Meister asserted that "there is a real possibility that we will see default rates double in the coming years." Private credit is a sector often grouped under the so-called shadow bankingShadow banking, or the shadow banking system, is a widespread phenomenon in the US. These are entities that, for all intents and purposes, operate as corporate banks, since they provide loans to all types of businesses, but lacking a banking license, they remain outside the scope of financial regulations and industry regulatory agencies.

The banks most affected by the war

The news has added to the list of variables negatively impacting the stock market, especially the soaring price of oil due to the war in Iran. This Thursday, the three main Wall Street indexes—the Dow Jones, the S&P 500, and the tech-heavy Nasdaq—opened lower.

Aside from the problems in the US financial sector, the situation in the Middle East is also affecting banks. JP Morgan, the largest US bank, has identified the world's banks with the highest level of risk due to their exposure to the Persian Gulf conflict. Among European banks, the British banks HSBC and Standard Chartered are the two most exposed, with 8% and 4% of their revenue, respectively, coming from business in the countries affected by the conflict.

At the Spanish level, Santander is one of the banks with the greatest exposure in the region, but at smaller levels, less than 1% of its income and profits, a situation similar to that of other large entities on the continent, such as the French banks BNP Paribas and Société Générale, and the Dutch bank ING.