Wall Street Returns to 2008 Crisis? Iranian Missiles Trigger Liquidity Test for Top U.S. Financial Institutions

Editor’s Note: In early 2026, the outbreak of conflict in the Middle East is crossing traditional geographic boundaries, reshaping the global capital landscape and reconstructing the risk pricing logic of global capital with unprecedented intensity. From the shutdown of oil tankers in the Strait of Hormuz to liquidity black holes lurking on Wall Street, the “butterfly effect” of the war is causing震震 in various asset classes. When macro cycles collide head-on with geopolitical tensions, it tests the resilience of every market participant.

In response to this complex systemic shock, Tencent Finance launches the series “The Global ‘Bill’ of the Middle East War,” reviewing supply chain disruptions and capital market volatility, shifting oil price centers, reallocation of safe-haven funds into precious metals, Fed policy constraints amid inflation and recession, and asset revaluation of Dubai as a regional safe haven. Through ongoing in-depth observation, we aim to clarify macroeconomic trends and asset evolution logic.

By Zhou Ailin

Edited by Liu Peng

Global attention is focused on the Iran conflict, yet deep within Wall Street, another crisis alert has quietly sounded. Asset management giants led by Blackstone and BlackRock are caught in a redemption crisis in private credit. Within this shadow banking system, which has surged to $1.6 trillion, fragile nested leverage and aggressive AI-related hard asset financing are facing severe liquidity tests. Coupled with geopolitical shocks, concerns over systemic financial risks have soared over the past month.

Several US-listed asset managers’ stock prices have plummeted. Blackstone’s private credit fund experienced a record 7.9% redemption request. The redemption pressures on Blue Owl Capital, Ares Management, and Apollo Global Management have also sharply increased.

This week, the world’s largest asset manager, BlackRock, announced restrictions on redemptions for its $26 billion HPS corporate loan fund (HLEND), marking the most impactful signal to date.

The stocks of Blackstone and BlackRock have recently plunged, with declines of 15.99% and 11.52% respectively over the past month.

Multiple Wall Street investors and traders told Tencent News “Qianwang” that since the 2008 crisis, everyone has been cautiously searching for the next hidden crisis. Two or three years ago, warnings about private credit risks had already been issued on Wall Street, but it hadn’t yet “come to light.” Now, there’s a clear whiff of the 2008 crisis.

The reason is that since the financial crisis, banks have been under strict regulation, but private credit has become a “shadow bank,” rapidly expanding due to high yields and flexible financing. However, banks are not isolated; private credit expansion largely depends on bank loans, and leverage structures are becoming increasingly complex. More market participants are comparing these to pre-2008 structured credit products. Recently, JPMorgan CEO Jamie Dimon warned that the market is exhibiting risk behaviors similar to those before the 2007 crisis, with hidden vulnerabilities in private credit and AI-related financing.

Although today’s private credit assets mainly consist of loans to mid-sized companies, funded primarily by closed-end funds, insurance funds, and semi-open products—rather than the mortgage-backed, layered securitized structures of 2008—the risk transmission pathways are not directly impacting large bank balance sheets. Still, financial markets are never isolated systems. When macro cycles, geopolitical tensions, and financial leverage intertwine, sharp price swings are only superficial; deeper tests are often just beginning.

The Private Credit Redemption Wave Intensifies

The first to attract market attention was Blue Owl. In late February, to cope with redemptions, the firm announced the sale of $1.4 billion in private credit loans to restore quarterly redemption mechanisms.

Blackstone’s approach was even more shocking: to avoid triggering gate provisions, Blackstone employees were asked to personally subscribe $150 million to fill the gap.

“Blackstone’s move is simply jaw-dropping. I dare not even say if it’s truly compliant,” said a senior investment advisor at a major US public fund to Tencent News “Qianwang.”

According to Goldman Sachs data, Blackstone’s flagship credit fund BCRED experienced significant net outflows in Q1 2026. The redemption rate in Q1 reached 7.9% (of initial net assets), a relatively high level in recent years.

While fund managers fulfilled all redemption requests, inflows slowed markedly. Data shows: January subscriptions were about $820 million, February about $616 million, and March about $514 million. This is over 50% lower than the average monthly subscription in 2025.

Overall, BCRED saw a net outflow of $1.4 billion in Q1 2026. Excluding Blackstone’s own and employees’ additional capital injections, the net outflow would reach $1.8 billion, representing a 15% annualized capital loss rate. This would severely impact the profitability of these asset managers.

Private credit has rapidly become one of the fastest-growing alternative asset classes globally in recent years, especially favored by wealth management channels and high-net-worth investors. But with interest rates remaining high, rising corporate default risks, and increasing media discussion of industry risks, retail investor funds are becoming more cautious.

Goldman Sachs notes that inflows into major non-listed Business Development Companies (BDCs) in the US have already fallen well below historical levels. As of early February, most non-listed BDCs had inflows over 40% below their 2025 annual average. BDCs typically lend to mid-sized companies, similar to listed private credit funds, with 90% profit distribution requirements and SEC regulation.

Rob Li, Managing Director of Amont Partners on Wall Street, told Tencent News “Qianwang” that private financing models have evolved from single-layer leverage to multi-layer nested structures. For example, in the new model, managers initially use LP funds of 100 yuan to make an investment, then borrow about 30 yuan from banks via first-layer leverage; subsequently, they set up special purpose entities (SPVs) to continue financing around 100 yuan.

This design means the same underlying assets are leveraged multiple times, significantly amplifying the scale of funds. If a company in the portfolio suffers a major loss, the financing institutions may require managers to draw funds from other unaffected assets for compensation. This risk can quickly escalate from individual assets to liquidity pressures at the portfolio level, making banks hard to stay uninvolved.

Li also mentioned another concerning trend: over the past years, funds from Europe, Japan, and other regions have sought high-yield assets in a low-interest environment, with some funds trusting well-known US PE firms, providing financing despite insufficient risk assessment. This could further amplify systemic risks.

Another Systemic Stress Test

The private credit market has expanded rapidly in recent years, now reaching about $1.6 trillion globally. The biggest structural risk lies in liquidity mismatch.

Specifically, the underlying assets of funds are often long-term corporate loans, and many believe these are closed-end products with limited shocks. However, some products aimed at wealth management channels are semi-liquid private credit funds. For example, BlackRock’s HPS corporate loan fund (HLEND) allows redemptions (recently hitting a quarterly 5% redemption limit); Blackstone’s BCRED also permits quarterly redemptions of up to 5%.

In stable market conditions, this structure functions smoothly; but if redemption demands concentrate, fund managers may need to sell assets or restrict redemptions, amplifying market volatility. Recent media reports have also increased redemption pressures.

According to a Goldman Sachs report obtained by Tencent News “Qianwang,” in Q3 2025, retail credit products contributed about 7% of management fee income for alternative asset managers. The largest contributors included Blue Owl Capital (about 21%), Blackstone (about 13%), Ares Management (about 10%), and Apollo Global Management (about 9%). If redemptions continue to rise and inflows slow further, future management fee growth could be impacted, and stock prices may face downward pressure.

Risks Still Temporarily Controllable

Although the shadow banking risks evoke echoes of 2008, current conditions are not yet out of control.

Goldman Sachs believes that the current situation does not constitute systemic risk. Over 90% of private credit capital is from institutional investors, whose funds typically have long lock-up periods and do not allow for immediate redemptions. Additionally, the entire private credit market still has over $500 billion in dry powder—uninvested capital—ready to absorb loan sales or asset adjustments.

While some funds’ redemption rates have exceeded the common 5% threshold, so far, no restrictions such as gating have been implemented. If redemption rates stay around 5% per quarter, even without new subscriptions, annual net outflows would be about $45 billion—still well below the roughly $500 billion of investable capital in private credit. However, due to high media attention, redemption rates may remain elevated through the first half of 2026 before gradually declining.

AI Hard Asset Financing Also Affected

Nevertheless, the risk transmission chain cannot be ignored. As interest rates rise rapidly, more small and medium enterprises face repayment pressures, and default rates may increase over the coming years. If economic growth slows and financing tightens, private credit markets could face greater stress.

In fact, the AI industry is also under pressure, with mutual reinforcement. Over the past half-year, due to increased volatility in AI and software sectors, valuations have fallen, and financing expectations have declined. Meanwhile, large amounts of private credit funds have flowed into these high-growth tech companies.

When equity valuations decline, IPO and refinancing windows narrow, risk premiums on private credit assets rise, and some investors begin redeeming related products (e.g., some Blue Owl funds), creating a transmission chain: “Tech stocks decline → Credit risk reassessment → Fund redemptions.”

A senior tech investor told Tencent News “Qianwang” that as early as Q3 last year, a $27 billion deal involving Meta and Blue Owl raised alarm on Wall Street and among regulators because it broke the “usual” pattern and concealed three extremely dangerous non-standard factors.

First is the secret residual value guarantee (RVG)—to secure the large loan, Meta signed a residual value guarantee. In other words, if the AI bubble bursts and the data center becomes worthless, Meta would need to pay out of pocket to creditors. The risk isn’t transferred; it’s just hidden in the footnotes of financial reports.

Second is a run on funds—traditional private equity funds are locked for 10 years, so liquidity crises are less likely. But BlueOwl’s fund pool includes many semi-liquid investors. Now, panicked investors are demanding redemptions, with requests reaching 17% in a single quarter. BlueOwl has been forced to halt redemptions. If even a giant like BlueOwl runs out of money, who will continue to build the $27 billion data center? Of course, Meta still has substantial profits and cash, but pressures on future tech giants are mounting.

Third is the “shadow debt” itself—although auditors like Ernst & Young signed off, they marked it as a CAM (Critical Audit Matter). In the auditing world, this is akin to a disclaimer, implying—this account is highly aggressive, and if it blows up later, don’t say I didn’t warn you. Meanwhile, US senators have called for federal investigation into this “shadow debt.”

Undeniably, the current situation is not a replay of 2008. But when the entire industry relies on extreme leverage and complex accounting tricks to hide true capital expenditures, systemic risks are lurking.