Private Credit in Check as Blackstone Faces Withdrawals

Blackstone, the New York based investment behemoth, faced surging withdrawals in Q1 2026 from BCRED, its flagship $82bn fund. 

Clients pulled $3.7bn though new commitments came in at $2bn, leaving net withdrawals at $1.7bn (a 2% net reduction).

BCRED is the largest fund of its kind that doesn't trade on the market. This is the first quarter it has faced withdrawals. 

Wall Street was also jittery Friday from the collapse of UK mortgage lender Market Financial Solutions Ltd. (MFS)This builds on concerns arising since the collapse of First Brands. Jefferies stock has been hit this year due to exposure to both businesses.

Private credit is a $2tr industry which has grown rapidly over the past decade. Questions over valuation and transparency have hit recently, culminating in impact to BCRED.

Jefferies Declares Exposure to First Brands

Jefferies Financial (JEF) disclosed its Point Bonita investment fund (which has mainly outside investors) had about $715 million exposure (through receivables) to auto-parts supplier First Brands. 

Jefferies said its own exposure was about $45m. 

Morgan Stanley, Blackrock  and Texas Treasury Safekeeping Trust, are looking to redeem cash from their investments in Point Bonita.

SMBC, a shareholder of Jefferies, has agreed to increase its stake in Jefferies and extend up to $2.5bn in new credit.

First Brands Collapse Rattles Debt Investors

The auto parts supplier First Brands, known through its brands like STP oil (whose name stands for Scientifically Treated Petroleum), Prestone antifreeze and Simoniz car waxes, has filed for Chapter 11 bankruptcy protection, disclosing liabilities on 29 Sept 2025 exceeding $10 billion.  

This has come in the wake of creditors concern on the use of opaque off-balance-sheet financing (by keeping certain assets and liabilities off balance sheet, healthier financial metrics can be obtained).

First Brands are likely to disclose an issue with its factoring arrangements, factoring being a financing method tied to the future revenue of the company. The companies Board and creditors are investigating the issue.

Apollo Global Management (NYSE: APO), an asset-rich American asset management firm, due to publish Q3 results on November 4th, had a 1 year CDS on the debt of First Brands, paying out in the event of failure to make payments. This is a credit play, not an equity short per se, and only pays if First Brands suffers on its debt payments. The fact APO has maintained that position has been a signal to the market.

Greek-American investment manager Jim Chanos (short-seller of Enron - made money, short seller of Tesla - lost money) has slammed the "magical machine" of private credit in response.