Blackstone Inc’s flagship private credit fund posted its first monthly loss in more than three years, one of the clearest signs yet of weakening performance in the US$1.8 trillion market.
The US$83 billion fund, known as BCRED, lost 0.4 percent last month, according to its Web site. It was the first monthly decline since September 2022. Performance was flat for the first two months of the year after an 8 percent gain last year, the Web site shows.
Blackstone told investors its loss last month reflected wider spreads across public and private markets, as well as unrealized marks on individual names including Medallia Inc, according to a message to financial advisers.
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In the message, reported earlier by the Financial Times, Blackstone pointed out that the fund outperformed the leveraged loan market by around 0.4 percentage points last month and 1 percentage point since the start of the year, which it said underscored the benefits of private credit during volatile markets.
“BCRED continues to deliver strong performance for its investors, with a 9.5 percent annualized total return since inception for Class I shares,” a spokesperson for the firm said in an e-mailed statement. The fund was set up in January 2021.
BCRED is among a number of private credit vehicles that have faced elevated redemptions in recent quarters, amid concerns about valuations and underwriting standards in credit markets, as well as the potential for artificial intelligence to disrupt software businesses.
Blackstone disclosed last month that it had marked down the value of its loan to Medallia, a software company owned by Thoma Bravo, to US$0.78 on the dollar. The loan has become a weak spot for private credit lenders, exposing sharp differences in valuations across managers.
The alternative asset manager also took the unusual step of using its own cash as well as contributions from senior leaders to meet redemption requests for BCRED that exceeded the fund’s previously set limit of 5 percent of net assets.
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