A Private Credit Liquidity Crunch Has Already Started | Leyla Kunimoto

Why It Matters

The tightening of redemption limits in semi‑liquid private‑credit funds raises liquidity risk for investors and could reshape capital flows, influencing both loan pricing and the broader alternative‑asset market.

Key Takeaways

• Semi‑liquid private credit inflows have stalled, prompting redemptions.
• Spreads are expected to widen as new capital dries up.
• Funds can only redeem up to 5‑7% quarterly, leading to prorations.
• Cliffwater faced 14% redemption requests, capping withdrawals for investors.
• Semi‑liquid structures eliminate J‑curve but expose liquidity risk.

Summary

The episode spotlights a nascent liquidity crunch in semi‑liquid private‑credit vehicles, as explained by Leyla Kunimoto of Accredited Investor Insights. After a surge of evergreen fund inflows from 2022 through 2025—driven by retail and wealth‑manager capital—new capital has dried up, prompting higher spreads and a shift from fundraising to redemption pressure.

Kunimoto notes that private‑credit funds, which now comprise roughly half of all semi‑liquid alternatives, can only honor redemption requests up to 5 % of net assets per quarter, with a discretionary lift to 7 %. When investor demand exceeds these caps, managers prorate payouts, leaving many investors with only a fraction of their requested cash. The phenomenon is not unprecedented; similar gating occurred in non‑traded REITs like BEIT and Starwood, but this is the first time it has hit private‑credit funds at scale.

A concrete example is Cliffwater’s fund, which in Q1 2026 saw 14 % of its capital requested for redemption. Although the fund still recorded net inflows—raising about $3 billion while paying out $2.2 billion—the excess demand forced a capped, prorated distribution. The fund’s asset mix includes 39 % private‑investment vehicles such as CLOs and LP stakes, which are less transparent than direct senior‑secured loans, amplifying liquidity concerns.

The crunch signals a turning point for investors and managers alike. Higher spreads may attract new loan originations, but the liquidity constraints could deter retail capital and pressure managers to tighten redemption caps or restructure offerings. Asset allocators must reassess risk‑adjusted returns, while issuers may find a brief window of favorable borrowing conditions before the market fully adjusts.

Original Description

This episode is brought to you by the Pictet AI Enhanced International Equity ETF ($PQNT):

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In this episode, Jack sits down with Leyla Kunimoto, founder of Accredited Investor Insights, to discuss her journey into private markets and the ongoing "democratization" of alternative assets. The conversation explores the rise of "evergreen" or semi-liquid structures, which allow retail investors to bypass the traditional "J curve" by deploying capital almost immediately. Leyla provides a detailed look at the current wave of redemption requests hitting major private credit funds like Cliffwater and Blackstone, explaining the mechanics of 5% quarterly caps used to prevent the fire selling of assets.She further breaks down the risks associated with Collateralized Loan Obligations (CLOs) and the rise of "shadow defaults" through payment-in-kind (PIK) interest toggles. The interview highlights why Leyla currently prefers publicly traded Business Development Companies (BDCs) over private ones, noting the potential arbitrage available when public shares trade at a significant discount to their net asset value. Finally, Leyla shares why she is far more bearish on private equity than private credit, citing the asset class's extreme opaqueness and junior position in the capital stack. Recorded March 29, 2026.

Accredited Insight:

Cliffwater Part 1: https://www.accreditedinsight.com/p/cliffwater-corporate-lending-fund

Cliffwater Redemptions: https://www.accreditedinsight.com/p/cliffwater-corporate-lending-fund-d4c

Follow Leyla Kunimoto on LinkedIn https://www.linkedin.com/in/lkunimoto/

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Timestamps

00:00 Intro

00:24 Pictet $PQNT $PQUS Preroll

00:50 From Endowments to Wealth Managers: Private Credit's Journey

14:00 Cliffwater

27:34 Pictet $PQNT $PQUS Midroll

29:25 CLO (Collateralized Loan Obligations) Role in Private Credit

33:00 Public BDCs (Business Development Companies) vs. Private

39:00 "Looking at Alt Managers Equity"

42:20 Blue Owl & OBDC II

47:00 Ares & Apollo

55:00 Regulatory Cap on Leverage

1:09:00 The Other Side

1:23:00 "I'm Far More Worried About Private Equity Than Private Credit"

1:24:50 Pictet $PQNT $PQUS Endroll

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