Monetary Matters with Jack Farley
Monetary Matters with Jack Farley

The Private Credit Boom is Over: Redemption Requests Exceed Liquidity | James Elbaor | Marlton LLC

September 27, 2026

AI Summary

5 min read

The Private Credit Boom Has Ended—Now the Unwinding Begins

In the third quarter of 2024, Blackstone's $82 billion private credit fund Bcred received redemption requests for 10% of its shares outstanding—roughly $8 billion. The fund's gate mechanism caps quarterly redemptions at 5%, so Blackstone will fulfill those requests over time. But as James Elbaor, founder of Marlton LLC, puts it bluntly: "The private credit boom is over." The billionaires have already been made. No new capital is flowing into the strategy. What comes next is an extended period of consolidation, restructuring, and forced choices for asset managers who built their growth on a product that was sold as liquid but was never quite that.

The Core Problem: A Product Sold as If the Gate Didn't Exist

The fundamental issue is structural, not necessarily about loan quality. Private credit interval funds offer periodic liquidity—typically quarterly—but with a gate that caps redemptions at 5% of assets. When demand exceeds that threshold, investors wait. Elbaor describes this as "a classic duration risk issue, similar to a bank where you're borrowing short and lending long." The gate was always in the fund documents, but the product was marketed to retail investors as if it didn't exist.

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What you'll learn

  • 1 (00:00) **The Private Credit Boom is Over** - James states the core thesis: the boom is finished and new capital has stopped flowing.
  • 2 (01:25) **The Core Problem: Product Sold Without Understanding the Gate** - James explains why redemption requests are exceeding liquidity.
  • 3 (03:44) **Is the Problem Bad Loans or Buyer's Remorse?** - The discussion moves to whether the underlying assets are impaired or if investors just want to leave.
  • 4 (04:47) **Options for Asset Managers: IPO, Wind Down, or Merge** - James outlines the strategic choices available to managers of distressed private credit vehicles.
  • 5 (08:28) **The M&A Landscape: Strategic vs. Financial Buyers** - James explains the dynamics of consolidation in the private credit space.
  • 6 (13:06) **The "Real" NAV Problem and the AI/SAS Disruption** - James argues that while NAV is not catastrophically wrong, it will need to be reassessed downward.
  • 7 (16:21) **Private Credit vs. Private Equity: The Liquidity Time Bomb** - James contrasts the immediate pressures on private credit with the delayed reckoning for private equity.

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Show Notes

James Elbaor, Founder and Portfolio Manager at Marlton LLC joins OPM to discuss why the private credit boom is officially over. Elbaor explains how artificial intelligence is threatening the SaaS businesses that make up over half a trillion dollars of private credit exposure, while also detailing how liquidity gates are currently trapping investors in massive interval funds like BCRED. The discussion concludes by exploring lucrative upcoming merger opportunities in the public BDC space and analyzing why asset managers utilizing permanent capital vehicles are being rewarded with premium market multiples.


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Timestamps:

00:00 Intro

01:42 Private Credit Redemptions Continue

07:03 IPO Window Shuts & Credit Fund M&A

15:28 AI Threat to SaaS Borrowers

16:51 Sponsor Message Plutus

18:17 Private Credit vs Private Equity

24:25 Systemic Risk and Wrappers

29:15 Public vs Private BDC Gap

34:46 Why Interval Funds List

39:44 Alt Managers Valuation Reset

43:33 Permanent Capital Explained

50:17 Hedge Funds vs Private Equity

54:41 Pershing Square Liquidity

01:04:17 Conclusion

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