* Bond yields of private credit funds at one-year highs

* Fourier Asset Management highlights liquidity stress in

$2 trln market

* Major semi-liquid funds of Oaktree and BlackRock ( BLK ) face

rising bond spreads

By Nell Mackenzie

LONDON, March 25 (Reuters) - Bonds issued by semi-liquid

private credit funds have fallen sharply in value since early

February to trade at their weakest in a year, in a sign that

investors were bracing for stress in the sector even before a

rush of recent redemptions, according to bond trading hedge fund

Fourier Asset Management.

Private-credit market jitters have coursed through the markets

this month, with some major U.S. banks tightening lending while

the funds have capped withdrawals as mounting concerns over

valuations, transparency and the health of the overall economy

have prompted some investors to exit the sector.

"The $2 trillion semi-liquid private credit market is

navigating its most significant liquidity stress test since

inception," Fourier said in a March letter seen by Reuters.

Interval funds, or non-traded BDCs, offer windows when

investors can take their money back.

Because a fund value falls when investors withdraw money,

sometimes funds restrict or delay full redemptions to prevent

other investors who have chosen to remain in the fund seeing

their shares sharply drop due to such redemptions.

Fourier takes long and short positions in the overall credit

market but does not have a position on these funds.

Some alternative asset managers have recently capped withdrawals

at private credit funds after a surge in redemption requests.

The difference between bond yields from five major interval

funds and comparable government bonds rose before some of these

funds faced high redemption requests, Fourier said.

This included bonds issued by the funds of Oaktree, BlackRock ( BLK ),

Blue Owl, Blackstone and Ares Capital ( ARCC ). The companies declined to

comment.

These bond spreads, often seen as an indicator of how risky a

bond is, narrowed in the summer of 2025 and earlier this year,

before widening sharply from early February onwards, the hedge

fund added. The fund's analysis ran just beyond March 8.

"The stress in semi-liquid fund structures is corroborated -

and in some cases preceded - by signals in the public bond

markets," the letter said.

It pointed to Oaktree's Strategic Credit Fund as one

example, noting the fund has seen its credit bond spreads widen

to around 250 basis points (bps), near the highest levels since

April 2025, citing data from Barclays ( BCS ) and S&P Global Market

Intelligence.

Oaktree faces elevated redemption pressure heading into its

next quarterly earnings report, due at the end of April, the

letter said.

Oaktree's Strategic Credit Fund is rated Baa3 by Moody's and

BBB-, one notch above junk territory. Oaktree declined to

comment.

BlackRock's ( BLK ) HPS Corporate Lending Fund, rated BBB- by S&P

and Baa2 by Moody's, saw its bond spreads widen to as much as

around 258 bps in March, data from the letter showed. BlackRock ( BLK )

declined to comment.

The ICE BofA U.S. Corporate Index closed at 121 bps on

Tuesday, down from a peak earlier in March. The ICE U.S. High

Yield Index closed at 308 bps, ICE data showed.

Fourier Asset Management was founded by Orlando Gemes,

previously a Hermes Fund Managers credit manager who began

trading bonds in 2000, according to LinkedIn.

The bond spread widening was a sign of increasing investor angst

about private credit, Fourier said.