Private Credit Under Pressure: Liquidity Mismatches in an AI-Disrupted Cycle

Corporate credit markets have become unsettled about the potential for advanced agentic AI tools from firms such as Anthropic and OpenAI to automate functions across legal, analytical, marketing, and sales workflows, effectively targeting the software as a service (SaaS)/enterprise software space. Those concerns are highest within the private credit market, and that market is confronting its most meaningful stress test since becoming a dominant source of non‑bank financing, with an emerging wave of redemption pressure providing the clearest early signal of underlying liquidity mismatches. The suspension of redemptions across several large non‑traded vehicles has exposed how appraisal‑based valuations, limited secondary‑market liquidity, and concentrated exposures in enterprise software can interact in a higher‑rate environment. These events are occurring against a macro backdrop defined by tighter financial conditions for some, weakening borrower fundamentals, and accelerating AI‑related disruption, all of which are challenging the optimistic underwriting assumptions embedded in loans originated mostly during the 2020–2021 cycle. As redemption requests rise and managers respond through asset sales, return‑of‑capital programs, or permanent gating, we continue to advocate for investing in managers who apply disciplined, conservative valuation methodologies, with portfolios composed of senior secured debt securities.