Redemption Day

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I wasn’t going to write about private credit this week. I was all set to get stuck into a piece about maritime insurance. I even had a name for it: The Underwriters of Hormuz. But it’s not often three of the top four stories in the Financial Times line up about a theme we’ve explored, so here we are (though if readers want to discuss what I learned about maritime insurance, drop me a line.)Spot the odd one outWe’ve discussed the rise of retail money in private credit before. By some accounts, vehicles set up to cater to wealthy individuals now make up 30% of the direct lending market. Many of those investors now want out. And as others watch redemption requests go in, they wonder if they shouldn’t ask for their money back too. According to data from Robert A Stanger & Co, redemption requests are running close to 8% this quarter, up from an average 1.3% in 2024.It’s been three years since Silicon Valley Bank reminded us what a bank run can look like. One of the lessons from that episode is that historic assumptions about the stability of retail funding need updating for the social media age. WhatsApp groups, X/Twitter and the like give retail investors coordination mechanisms with far greater reach and immediacy than ever before. The old logic that a diversified base of small investors was inherently stable no longer holds when information – and panic – spreads instantly.Private credit is structured differently to banks. Without the blanket of deposit insurance, managers employ other means to push out the duration of their funding. Typically, they impose redemption limits, c…