Nontraded business development companies returned nearly $5.9 billion to investors in the second quarter of 2026 and more than $12.7 billion year-to-date, according to Robert A. Stanger & Co. data reported this week. Golub Capital Private Credit Fund logged redemption requests at 8.5% of shares and will meet up to its 5% cap, joining Ares, Apollo, Morgan Stanley, and Blackstone in prorating withdrawals above the quarterly limit. Back in April, Bank of America predicted the wave would crest in the second quarter. The Q2 numbers are now in, and they tell a more useful story than the gating headlines: the system paid what it promised, the requests are enormous partly because of the caps themselves, and the money leaving is not coming back to private credit.
Key Takeaways
- Nontraded BDCs met roughly $5.9 billion in redemptions in Q2 2026 and $12.7 billion year-to-date (Robert A. Stanger & Co.), which means the funds honored their caps rather than freezing investors out.
- Bank of America’s April call that redemptions would peak in Q2 rested on a “proration reflex”: when a fund fills only part of a request, investors resubmit for more the next quarter, inflating the headline demand beyond the real desire to exit.
- Golub Capital’s 8.5% of shares requested against a 5% cap fits the pattern of Q1’s gated funds seeing larger Q2 requests, exactly what the reflex predicts.
- Fundraising told the quieter half of the story: about $11.9 billion raised year-to-date through May, down 55% from a year earlier, against roughly $12.9 billion in redemptions, a net outflow near $1 billion for the category.
- The capital is not rotating back into private credit. Stanger frames the destination as hard assets with low obsolescence, real estate and infrastructure, which changes what advisors should be preparing for next.
What the Q2 Numbers Actually Say
Strip away the alarm and the second quarter reads as a stress test that the semi-liquid structure passed, on its own narrow terms. We track the fund-level detail in the Trading Market Signals Private Credit Redemption Monitor, and the pattern held across the largest sponsors.
Golub Capital Private Credit Fund reported requests at 8.5% of shares outstanding and said it would fulfill up to its 5% quarterly limit. Ares, Apollo, Morgan Stanley, and Blackstone all saw requests above their 5% caps and paid on a pro-rata basis. None of them broke the mechanism. They did what the offering documents always said they would do: meet the cap, queue the rest.
The category-level figure is the one worth repeating to a nervous client. Nontraded BDCs returned close to $5.9 billion in the quarter and more than $12.7 billion for the year so far. That is real liquidity delivered, not a gate slammed shut. A fund that fills 5% of a 10% request has disappointed half its would-be sellers, but it has also written a large check to the other half. Both things are true, and the coverage that leads only with the gate misses the check.
The fundraising side is where the genuine pressure shows. Stanger put year-to-date nontraded BDC fundraising near $11.9 billion through May, down 55% from a year earlier, against roughly $12.9 billion in redemptions. That is a net outflow of about $1 billion for a category that had only ever grown. The problem is not that the funds cannot pay. It is that fewer new dollars are arriving to replace the ones walking out.
Did the Redemption Wave Actually Peak?
Bank of America’s analysts, led by Craig Siegenthaler, argued in late April that requests would peak in the second quarter and then fade. Their logic is the most useful analytical point in this whole episode, and it is widely misunderstood.
When a fund prorates a redemption, an investor who wanted out with $100 gets maybe $50 and stays in the queue for the rest. The rational response is to request more than you actually want next quarter, so that after proration you receive the amount you were really after. Multiply that behavior across thousands of advisors and the headline request figure inflates well beyond the true desire to exit. BofA projected the effect would push several funds sharply higher in Q2, Apollo Debt Solutions toward 15%, Ares Strategic Income near 14%, Blackstone’s BCRED around 12%, before the reflex burned itself out.
Golub’s 8.5% and the cluster of sponsors above 5% are consistent with that read. The requests are large in part because the caps are working, not because the underlying panic is growing. That distinction matters for anyone deciding whether to join the queue. If a meaningful share of the demand is a mechanical response to prior prorations rather than fresh conviction to leave, then the peak-and-fade path BofA sketched is plausible, with elevated requests bleeding into the third quarter before easing.
Here is the caution. A peak in redemption requests is not the same as a return of demand. The wave cresting means the outflow stops accelerating. It does not mean new money comes back. Those are two different clocks, and the fundraising data says the second one has not started ticking.
Why the Money Leaving Is Not Coming Back
Stanger framed the second-quarter behavior as a rotation, not a retreat in fear. Investors are moving out of private credit and toward what the firm calls HALO strategies, hard assets with low obsolescence, meaning real estate and infrastructure. That framing deserves attention because it tells advisors where the next allocation fight will be.
The move makes sense on its own logic. An investor who learned in 2026 that a “semi-liquid” credit wrapper can gate withdrawals is not looking for a different credit wrapper with the same terms. They are looking for either genuine liquidity or an asset whose value does not depend on a manager’s quarterly mark. Real assets offer the second. Whether the wrappers selling them solve the liquidity lesson any better than private credit did is the question advisors should be asking before the same story repeats in a new sleeve.
This rotation also connects to the fight playing out in retirement plans. The Department of Labor’s proposed safe harbor would invite these same private strategies into 401(k) menus, a collision we examined in private markets coming to the 401(k) just as they gate redemptions. The retail lesson of 2026 is arriving in the institutional channel exactly as the DC market is being asked to embrace it.
For the advisors who spent the second quarter deciding what to do with an existing sleeve, the repositioning playbook we laid out in June still holds, and the public-versus-private valuation gap it described has not closed.
What Should Advisors Do With the Q2 Read?
The instinct after a quarter like this is to either dump the position or defend it. Both are lazy. The Q2 data supports a more specific response.
- Do not add to the proration reflex. If your client genuinely wants out, size the request to the real target and understand it will be prorated. Inflating the ask to game the cap is what created the self-reinforcing queue in the first place, and it worsens the fill rate for everyone, including you next quarter.
- Read fulfillment, not just requests. A fund that met its full 5% cap and returned capital on schedule behaves differently from one that cut its cap or suspended redemptions. The $5.9 billion returned is a data point in the fund’s favor, and it belongs in the diligence file alongside the request percentage.
- Decide where the exit money goes before you request it. If the rotation is toward real assets and infrastructure, the liquidity terms of those vehicles deserve the same scrutiny private credit just failed. Solve for liquidity first, yield second, or you will be writing this same review about a different asset in 2027.
- Watch the fundraising line, not only the redemption line. Net outflows near $1 billion tell you the category is shrinking. A fund losing assets has less room to absorb the next wave of requests, so the direction of net flows is a forward indicator of gate risk.
What to Watch in Q3 2026
The BofA framework gives a testable prediction: requests stay elevated into the third quarter, then fall below first-quarter levels by the fourth as the proration reflex exhausts itself. If Q3 requests come in below Q2 at the major sponsors, the peak thesis holds and the acute phase of the retail reset is ending. If they climb again, the story is no longer about mechanics and becomes about conviction, which would be a more serious signal.
The second thing to watch is any move from prorating the cap to cutting or suspending it. Every fund discussed here met its cap in Q2. The first sponsor to lower a cap or halt redemptions outright would mark a different chapter, and it is the single event that would turn an orderly reset into something worse. We will track it as the Q3 tenders report in the redemption monitor.
Three Questions for Your Investment Committee
- For each private credit position we hold, did the fund meet its full cap and return capital on schedule in Q2, or did it cut the cap? The answer separates an orderly gate from a warning sign, and only one of them belongs in a hold decision.
- When we submit a redemption, are we sizing it to what the client actually needs, or inflating it to beat the proration? The second choice feels smart and makes the queue worse for the whole category, us included.
- If our clients are rotating out of private credit toward real assets and infrastructure, have we run the same liquidity stress test on those vehicles that private credit just failed? The lesson of 2026 is about wrapper liquidity, and it does not stay solved when the asset class changes.
Sources: Robert A. Stanger & Co. Q2 2026 nontraded BDC data as reported by AltsWire and Connect Money (July 2026); Bank of America Global Research, Craig Siegenthaler team (April 29, 2026); Golub Capital, Ares, Apollo, Morgan Stanley, and Blackstone fund disclosures; Trading Market Signals Private Credit Redemption Monitor.
About Me
Associate Editor of financial news at Market signals where he writes and edits original analysis in and around the wealth management, as well as other parts of the financial markets and economy. He has more than five years of experience editing, proofreading, and fact-checking content on current financial events and politics.
