Bonds issued by semi-liquid private credit funds had already been under pressure before recent investor redemptions, highlighting underlying stress in the $2tn sector, according to a report by Reuters citing analysis by Fourier Asset Management. Spreads on bonds from major interval funds, including those managed by Oaktree Capital, BlackRock, Blue Owl, Blackstone, and Ares Capital, widened sharply since early February, signaling rising investor concern over liquidity and valuations. The private credit sector, which has expanded as an alternative to traditional banking, faced this scrutiny amid broader economic risks, as context shows its growth has drawn attention to valuation challenges.
Widening Bond Spreads in Interval Funds
Interval funds, which allow investors periodic redemption windows and often restrict withdrawals to protect remaining investors’ share values, saw bond spreads narrow in mid-2025 and early 2026 before widening significantly in February, per the analysis. For instance, Oaktree’s Strategic Credit Fund experienced spreads reaching approximately 250 basis points, near their highest since April 2025, while BlackRock’s HPS Corporate Lending Fund widened to roughly 258 basis points in March. This widening preceded some of the redemption activity observed this month, according to Fourier Asset Management’s report.
Market Stress and Investor Scrutiny
The semi-liquid private credit market has been facing mounting scrutiny as investors grow wary of valuations, transparency, and broader economic risks, with some funds imposing caps on withdrawals to manage redemption requests. Fourier describes this as the market’s most severe stress test since inception, where bond market signals have highlighted vulnerabilities. According to Private Equity Wire, these developments underscore ongoing challenges in the sector.
Fourier’s Role in Credit Markets
Fourier Asset Management, which does not hold positions in the specific funds mentioned, takes long and short positions across the broader credit market, providing an independent view on these trends. This approach allows the hedge fund to analyze sector-wide dynamics without direct exposure to the affected interval funds, as detailed in the Reuters-cited report.
