Blackstone Inc ( BX ) shares are trading lower on Thursday after Morgan Stanley became the latest major Wall Street firm to restrict withdrawals at one of its private‑credit funds.

Blackstone stock is testing key support levels. What’s behind BX weakness?

Morgan Stanley’s move has intensified fears of contagion across the roughly $2 trillion private‑credit market and has reminded investors of Blackstone's own surge in redemption requests at its BCRED fund earlier this month.

Morgan Stanley Limits Redemptions, Raising Contagion Fears

Morgan Stanley disclosed in a regulatory filing that it has limited withdrawals at its North Haven Private Income Fund after investors attempted to redeem nearly 11% of outstanding shares, Reuters reported. The fund returned about $169 million — roughly 45.8% of investor requests — for the quarter.

This comes on the heels of BlackRock Inc’s decision to slow withdrawals from its $26 billion HLEND fund after redemption requests climbed to 9.3% of net assets. With two of the biggest names on Wall Street imposing limits within weeks of each other, investors are increasingly worried that liquidity pressures may be spreading across the private‑credit landscape.

Blackstone's Own Redemption Pressures

Blackstone added to those concerns earlier this month when it revealed that its BCRED private‑credit fund saw a jump in withdrawal requests during the first quarter.

Morgan Stanley has warned that the private‑credit industry is navigating several challenges, including a sluggish M&A environment, questions about credit quality and shrinking yields. While the bank says its portfolio of 312 borrowers across 44 industries remains broadly stable, it also noted that the gap between strong and weak credits is widening.

AI‑Related Credit Risks Hit The Sector

Another layer of concern is emerging from the tech world. Analysts say investors are increasingly worried that AI could weaken the earnings power of software companies — a major borrower group in private credit — and make it harder for them to service their loans.

Reuters reported that JPMorgan has already marked down the value of certain software‑linked loans in private‑credit funds. The bank has also begun tightening lending tied to software‑sector credit exposure.

Louis Navellier, CIO of Navellier & Associates stated that default rates in some private‑credit funds are approaching 9%, though he believes expected Federal Reserve rate cuts should ease pressure on variable‑rate loans and make a worst‑case 15% default scenario unlikely.

Analysts also point to JPMorgan CEO Jamie Dimon's warning last October about "more cockroaches" lurking in the credit markets.

Blackstone Shares Hit 52-Week Lows

BX Price Action: Blackstone shares were down 3.98% at $102.98 at the time of publication on Thursday. The stock is trading at a new 52-week low, according to Benzinga Pro.

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