Morgan Stanley Caps Redemptions at $7 Billion Private Credit Fund for Third Straight Quarter
Key Takeaways
- •Morgan Stanley's roughly $7 billion North Haven Private Income Fund has limited withdrawals to its standard 5% quarterly cap for a third consecutive quarter, fulfilling fewer than half of redemption requests that reached 11.4% of shares.
- •Redemption demand exceeded twice the permitted level in each of the past three quarters, with Q1 2026 fulfilling about 45.8% of requests — roughly $169 million returned to investors — and Q2 2026 honoring approximately 43% of the 11.6% requested.
- •The fund holds a liquidity buffer of more than $2.2 billion in undrawn capacity and approximately $400 million in liquid loans as of May 31, 2026, but this has not been enough to satisfy withdrawal demand.
- •The redemption squeeze extends across the private credit industry, with Blackstone, Apollo, and BlackRock facing similar pressures, and Cliffwater limiting redemptions to 7% in Q1 2026 after investors requested 14%.
- •The North Haven fund's net asset value has declined by an estimated $100 million to $169 million per quarter after accounting for new investments and subscriptions.
Morgan Stanley has once again restricted how much money investors can pull from its roughly $7 billion North Haven Private Income Fund, marking the third consecutive quarter the firm has capped withdrawals. Investors sought to exit at more than twice the rate the fund was prepared to accommodate.
In a shareholder letter dated September 18, 2026, the fund disclosed that redemption requests reached 11.4% of shares for the most recent quarter. It honored only its standard 5% cap, meaning fewer than half of the requested redemptions were actually fulfilled. That 5% ceiling is a standard structural feature of vehicles like this one: because private credit funds hold loans that do not trade on public exchanges, they typically limit quarterly withdrawals to a set percentage of shares, offering periodic liquidity rather than daily access.
A Pattern, Not a One-Off
The latest restriction extends a clear trend in the fund's recent track record. In Q2 2026, investors requested redemptions totaling 11.6% and received roughly 43% of what they asked for. The quarter before, in Q1, requests came to 10.9%, with approximately 45.8% fulfilled — translating to about $169 million returned to investors. Across all three quarters, demand has run at more than twice what the cap allows, leaving the majority of each period's requests unfilled.
The fund has built what it calls a liquidity buffer: more than $2.2 billion in undrawn capacity and approximately $400 million in liquid loans, as of May 31, 2026. That is a meaningful war chest, but it has not been enough to satisfy the wave of withdrawal demand — a reminder that in private credit, even sizable reserves can fall short when exit requests keep outpacing quarterly limits.
An Industry-Wide Squeeze
Morgan Stanley is far from alone in this predicament. Blackstone, Apollo, and BlackRock have all faced similar pressures on their private credit and real estate vehicles, which hold longer-dated loans and property positions that cannot be sold as quickly as listed securities. That structural mismatch is why managers of this kind cap quarterly outflows and maintain liquidity buffers instead of offering on-demand cash.
Cliffwater, another prominent manager, limited redemptions in its own fund to 7% during Q1 2026 after investors requested 14%.
What Investors Are Watching
The North Haven fund's net asset value has declined by an estimated $100 million to $169 million per quarter after accounting for new investments and subscriptions. The next quarterly letter will show whether withdrawal requests cool off or press against the 5% cap for a fourth straight quarter — and where the liquidity buffer stands after the May 31, 2026 snapshot.
