HPS Corporate Lending Fund: The BlackRock Redemption Cap

The HPS Corporate Lending Fund is a $26 billion private credit fund, and in 2026 it became one of the most cited exhibits in the debate over whether private credit is America’s next subprime crisis. Dr. Martin Weiss’s presentation names it directly: BlackRock capped withdrawals from the fund at 5% per quarter after redemption requests ran to roughly double the normal quarterly limit.

Here is what actually happened, why it matters, and how it fits into the broader argument.

The Facts of the Cap

The core events are documented by Bloomberg and the Wall Street Journal. The HPS Corporate Lending Fund, a non-traded business development company (BDC) that lends directly to mid-sized companies, saw investors ask for their money back at a pace well above the fund’s quarterly normal. In response, the fund enforced its repurchase plan’s ceiling: no more than 5% of net asset value can be returned in any quarter.

A cap is not a freeze. Investors who requested redemptions received most of what they asked for up to the limit, with the backlog rolled into subsequent quarters. But the cap binding at all means demand to exit exceeded what the fund’s structure allows it to pay out in a quarter, which is precisely the scenario Weiss builds his pitch around. The presentation’s recurring image for this is a fund where the “exit doors are slammed shut.”

For context on how these structures work: non-traded credit funds hold illiquid loans that cannot be sold quickly, so they ration investor exits by design. The 5% quarterly cap is standard language in these products. What made 2026 notable is that the cap went from fine print to binding constraint at the largest funds.

Why This One Fund Matters

The HPS fund is a flagship. BlackRock acquired HPS Investment Partners, one of the largest private credit managers, and the Corporate Lending Fund is a marquee retail-facing vehicle. When the withdrawal cap at a fund this size starts binding, it tells you something about investor sentiment toward the whole asset class, not just one portfolio.

Blackstone’s BCRED, the largest private credit fund of its kind, has held its own 5% quarterly repurchase cap amid multi-billion-dollar redemption backlogs, as Reuters has reported. Two of the biggest names in global asset management, both limiting exits at the same time, is the kind of pattern a crisis thesis is built from.

How Weiss Uses It

In “America’s Next Subprime Crisis,” Weiss argues that the $3 trillion private credit market is “not subprime mortgages, but subprime private credit,” and that the system is “already showing early signs of a future meltdown.” The redemption caps are his proof that the stress is not hypothetical: the named events in the pitch (First Brands’ Chapter 11 with over $11 billion in liabilities, Tricolor’s double-pledged collateral and SEC fraud charges, and the caps at HPS and BCRED) all check out against the financial press. For more on that, see our “Private Credit Risks: What Weiss Wants You to Check” piece.

The honest distinction to keep in mind: the caps are fact, and the conclusion Weiss draws from them (a crisis “larger than” 2008) is his forecast. He hedges it himself: “I have to believe we are in the early stages of a financial crisis that could be larger than the great financial crisis of two thousand eight.” We walk through the full story in our “Weiss Ratings: The Firm That Called 97% of Bank Failures” article.

The Liquidity Spectrum, for Context

The HPS cap sits at one end of a spectrum investors should understand. Publicly traded funds price continuously, so exit risk shows up as price declines instead of queues. Semi-liquid products like interval funds and non-traded BDCs ration exits on a schedule, which is the structure at issue here. Fully private funds can lock capital for a decade. Each structure matches the liquidity of the fund’s assets to the promises it makes; the fairness question is whether the investor understood the promise at purchase, and a binding cap is the moment that question gets answered.

What Investors Should Actually Take From It

If you hold a non-traded private credit fund, three practical points follow. First, know your fund’s repurchase terms before you need them; the quarterly cap is in the prospectus, and it binds precisely when many people want out at once. Second, the cap does not mean the underlying loans have defaulted; it means the fund cannot sell illiquid loans fast enough to meet exit demand. Third, sentiment at the top of the market matters: funds that see redemption surges in calm markets are more exposed in stressed ones.

The broader question, whether private credit belongs in a retirement portfolio at all, is one we cover in our guide to how annuities work and what they really cost, since insurers have shifted billions into private credit in recent years, and in our look at subprime AI debt inside the AI bubble warnings, which covers the parallel lending-boom argument.

Weiss’s presentation leads to a $49 trial year of the Safe Money Report with five protection reports, including how to check whether your own funds are loaded with private credit, and a 12-month refund window. You can review the presentation here.

The HPS redemption cap is a small event with a large signal value, and it is the single most concrete reason the private credit debate moved from theory to headlines this year.

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