Private Credit in crisis: UBS reportedly triggered fund redemption wave

UBS has reportedly advised certain clients to scale back their investments in Private Credit, a move that has allegedly triggered a significant wave of redemptions from these funds. According to a report by the Financial Times, this advice, issued in the autumn of 2025, led clients with substantial Private Credit exposure to begin withdrawing large sums from a technology-heavy Blue Owl fund in the fourth quarter of 2025.

“

The bank advised clients with a high exposure to Private Credit to reduce their investments.

The Private Credit sector is currently facing a crisis of confidence among private investors. These non-listed assets, which previously offered higher returns in exchange for illiquidity and a degree of opacity, have recently seen a surge of nervous investors seeking to exit. A primary concern driving this sentiment is the potential impact of artificial intelligence (AI) on the business models of numerous companies, particularly in the software sector, which are often financed by private equity firms.

This investor anxiety has forced many private market players, including major names like KKR, Blackrock, Partners Group, and Blue Owl, to limit redemptions from their funds. Blue Owl, heavily invested in Private Credit, offers funds that directly lend to medium-sized companies, often in the software industry. The FT report suggests that UBS played a crucial role in building up the Blue Owl fund in question, which was tailored to UBS clients and launched in 2022 after discussions with the bank. It is estimated that at least two-thirds of the fund's approximately $3 billion in assets came from UBS clients, predominantly from Asia.

“

The fund was tailored to the needs of UBS clients and launched after discussions with the large bank in 2022.

Industry representatives find such a high degree of dependence on a single distribution partner unusual, as fundraising typically aims for greater diversification. UBS has declined to comment on the matter. However, sources within the bank indicate that its overall view on Private Credit has not changed. In its 2026 investment outlook, UBS noted that while interest rate cuts have lowered yields, Private Credit remains attractive for investors with a small allocation to the asset class.

“

For investors with a small allocation in this area, Private Credit remains attractive.