Morgan Stanley Gates Private Credit Fund a Second Time as 11% of Investors Seek Exit

Morgan Stanley has capped withdrawals from one of its private credit funds for a second time, according to Investing.com, after about 11% of investors sought to redeem their holdings. Gating, where a fund limits how much money investors can pull out at once, is a mechanism funds use to avoid forced asset sales. The repeat gating raises questions about liquidity in private credit funds more broadly, an asset class that has attracted large amounts of capital from investors seeking yield outside public bond markets. A second consecutive limit suggests redemption pressure has not eased since the fund was first gated. It is not yet clear how widespread similar gating actions are across other private credit funds, or whether Morgan Stanley will need to impose further restrictions if redemption requests continue.