Since Fitch flagged that private credit portfolios hit a record default rate of 8.1% in 2024, climbing to 9.2% in 2025, the sector’s been a slow-motion stress test waiting for something to break.
Monday night, Apollo gave it a push.
Apollo Debt Solutions BDC, Apollo’s $15 billion private credit vehicle, will satisfy only about 45% of withdrawal requests this quarter after investors tried to redeem 11.2% of shares outstanding in Q1, more than double the fund’s 5% quarterly limit, per Reuters and CNBC. APO closed at $110.45, down 1.4% on the day.
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Apollo, to its credit, has an explanation. Several, actually. The filing cites “heightened market volatility,” “increased scrutiny to private credit as an asset class,” questions about “product liquidity mechanisms,” and concerns about “the impact of technological innovation on different business models.” That last one is doing a lot of diplomatic heavy lifting for “our software borrowers might be in trouble.”
Reading between the lines isn’t hard. When Apollo is fielding 2x its redemption cap in a single quarter, investors are telling you something. Maybe they don’t trust the valuations. Maybe they think the underlying loans are worth less than Apollo says. Maybe the borrowers who took on a lot of debt at high rates back when AI was going to fix everything are now finding out that it hasn’t, and Apollo is closer to that reality than anyone wants to admit. Iran jitters, broader crash fears, and general unease about how long the private credit boom can hold all factor in too.
Apollo built a $15 billion vehicle on the promise that private credit could deliver yield without the volatility of public markets. Right now, its own investors are voting with their redemption requests.
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