Goldman Sachs private credit fund narrowly misses a redemption crisis

Goldman Sachs Private Credit Corp. just dodged a bullet.

The firm's non-traded business development company (BDC) reported in a recent filing that redemption requests in the first quarter of 2026 came in at exactly 4.999% of outstanding shares.

It stopped a fraction of a percentage point below the industry-wide 5% quarterly cap that triggers mandatory withdrawal restrictions.

Had it crossed that threshold, the fund would have joined a growing list of private credit companies such as Blue Owl Capital that have been forced to cap redemptions and effectively lock investors in.

“We are the only non-traded BDC in the peer group whose repurchase requests came in below the standard 5% quarterly cap,” the fund said in a letter to shareholders according to Bloomberg.

But the redemptions were still higher than the 3.5% rate recorded in the fourth quarter of 2025.

Related: Blue Owl denies halting redemptions amid $1.4B asset sale

The traditional way companies borrow money is through banks. If a business needs $50 million to expand, it walks into a bank, applies for a loan, and if approved, gets the money.

But this system has limits. Banks are regulated, slow-moving, and risk-averse. Many mid-sized and smaller companies, especially private ones not listed on a stock exchange, either don't qualify for traditional bank loans or find the terms too restrictive.

That's where private credit steps in.

Private credit is lending done outside the traditional banking system. Instead of banks making loans to mid-sized companies, investment funds raise money from investors and lend it directly.

The companies also pay higher interest rates in exchange for that access. The funds that do this lending are often structured as business development companies, or BDCs.

A BDC pools investor capital, lends it out, and passes the interest income back to shareholders.

There are two different types of BDCs.

On one hand are the traded BDCs (also called Listed BDCs) that are listed on the NYSE or the Nasdaq. Their shares trade every day just like any other stock. If you want your money back, you simply sell your shares on the open market to another buyer. Examples include Ares Capital Corporation (Nasdaq: ARCC) and Prospect Capital Corporation (Nasdaq: PSEC).

Non-traded BDCs, on the other hand, are not listed on a stock exchange. This means investors can only get their money out through quarterly "repurchase" windows offered by the fund itself. Goldman Sachs Private Credit Corp., Blue Owl Credit Income Corp. (OCIC) and Blue Owl Technology Income Corp. (OTIC) are examples of non-traded BDCs.

Non-traded BDCs come with a special condition on how much companies can redeem during repurchase windows.

Imagine a scenario where bad news hits. The economy wobbles, investors get nervous, and everyone wants their money back at the same time.

If there are no restrictions, a fund could face a classic bank run situation. It would be forced to sell loans at throwaway prices to raise cash. This would destroy value for everyone, including the investors who stayed.

To prevent this, most non-traded BDCs cap those quarterly repurchases at 5% of outstanding shares. If requests exceed 5%, the fund can refuse to honor the excess and effectively trap investor capital until the next window, or longer. That 5% line is the tripwire the entire industry watches.

This is exactly what Blue Owl did in April.

Blue Owl Capital is a New York-based alternative asset management firm.

In November 2025, it declared its intent to merge its unlisted and listed BDCs, which would have immediately handed its investors a 20% loss. The backlash forced a cancellation, but the damage was done.

A lawsuit filed in January 2026 alleged that Blue Owl executives had spent most of the year telling investors there was no meaningful pressure from redemptions while $150 million was quietly flowing out.

A Blue Owl spokesperson told TheStreet Roundtable that while the company would not like to comment on ongoing litigation,

"...We believe that the class action filed against Blue Owl is without merit and we intend to defend ourselves vigorously in this matter."

By February 2026, reports emerged that Blue Owl had permanently halted quarterly redemptions, switched to return-of-capital distributions, and announced a $1.4 billion asset sale. Although Blue Owl denied the halt, the episode rattled the private credit market.

On Apr. 2, Blue Owl informed investors in a letter that it has capped requests for two of its private credit funds at 5%. This came after redemption requests surged to new highs.

The Blue Owl spokesperson highlighted that when total flows are taken into account, the redemptions in the first quarter of 2026 for two of its non-traded BDCs, OCIC and OTIC, were less than 1% and 2%, respectively, of the funds’ assets under management.

"90% of investors remained invested in OCIC. These funds have some of the most conservative liquidity positions in the industry and the credit quality of their underlying assets is quite strong," they added.

Goldman Sachs' private credit fund addressed the building pressure on the industry in a letter to its shareholders back in February.

"As we enter 2026, the private credit landscape is facing volatile macroeconomic conditions, shifting flows in the traded and non-traded BDC market, and accelerating technological change - particularly around AI."

The letter further added,

"We do not underestimate the risk of AI disruption. We have no doubt that some companies face significant challenges and will be disrupted," the fund stated.

Goldman's fund argued that its flexibility to deploy credit comes from its reliance on institutional capital over retail capital. This insulates it from the forced-deployment pressure that retail-heavy investment vehicles create.

Still, the GS credit fund was careful not to overplay its hand.

"Now to be clear, we are all in the same market and we are certainly not entirely insulated from the dynamics of the industry so these stats will ebb and flow, " the fund mentioned.

Goldman Sachs declined to provide additional comment on this to TheStreet Roundtable.

The cracks forming in private credit create a case for onchain private lending.

It uses blockchain to issue loans to businesses and institutions without requiring heavy collateral. Unlike traditional decentralized finance, it draws on real-world assets and offchain data to extend credit, making it a more capital-efficient alternative to conventional crypto lending models.

Because these loans exist on a public blockchain, positions can theoretically be traded, transferred, or exited without waiting for a quarterly redemption window. The illiquidity that is currently trapping investors in non-traded BDCs is, by design, the problem that tokenized credit rails are built to solve.

That being said, it is still a type of crypto lending that comes with its own scars.

Since the beginning of 2026, multiple crypto lending platforms have either shut down or filed for Chapter 11 bankruptcy.

Private credit stress does not automatically translate into a Bitcoin (BTC) rally, at least not immediately.

In the short term, capital flowing out of illiquid vehicles tends to seek safety rather than volatility, which means crypto can feel the squeeze alongside other risk assets.

But the longer-term dynamic runs the other way. When credit cracks spread broadly enough, central banks historically respond with liquidity.

The most recent example was the pandemic, when the Fed slashed rates to zero and flooded the system with stimulus. As a result, Bitcoin surged from $5,000 in March of that year to nearly $60,000 by November 2021.

What is different this time is the infrastructure sitting on top of it. Spot Bitcoin ETFs, now holding over $88 billion in assets across BlackRock, Fidelity, and others. This means that when liquidity eventually loosens, institutional capital has a clean, regulated, immediately accessible vehicle to rotate into.

Tokenization is pushing that logic further still, placing private credit and real estate onto blockchain rails and making previously locked capital tradable.

Related: Tokenization of private credit could unlock transparency and growth, says Kadena exec

This story was originally published by TheStreet on Apr 8, 2026, where it first appeared in the MARKETS section. Add TheStreet as a Preferred Source by clicking here.