2 weeks ago
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KKR’s semi-liquid private credit fund just caught a break. After a rough second quarter that forced the firm to cap how much investors could pull out, redemption requests at KKR-Income Trust I fell to roughly 2.5% of net asset value in Q3 2026, down from more than 5% the prior quarter.
The numbers behind the relief
KKR plans to pay out $34.7 million to cover Q3 redemption requests. On top of that, the firm will fulfill $10.5 million in leftover requests from Q2, when demand to exit exceeded the fund’s withdrawal limits and investors had to wait in line.
The fund posted a 1.9% return in Q2 on its $1.4 billion NAV base, and its annualized net total return since inception sits at 10.3%.
Semi-liquid funds like KKR-Income Trust I offer investors periodic windows to redeem shares, usually quarterly, but reserve the right to gate withdrawals if too many people head for the door at once. The quarterly liquidity cap is typically set at 5% of NAV. More than 5% of the fund’s NAV was requested for withdrawal in Q2, triggering that cap mechanism.
Blackstone’s bigger headache
Blackstone’s BCRED, its flagship non-traded private credit fund, saw redemption requests hit 10% of NAV, forcing the firm to cap withdrawals at 5% in Q3 2026. That’s four times the redemption rate KKR experienced in the same period.
A sector under quiet stress
Non-accruing loans across private credit portfolios climbed to approximately 2.8% in 2026, the highest rate in roughly a decade, a signal that the credit quality of underlying borrowers is deteriorating. This industry trend has been mirrored by other managers including Cliffwater.
With roughly $45 million in combined Q2 and Q3 payouts flowing out the door, KKR’s fund managers will need to balance liquidity reserves against the opportunity cost of holding too much cash in a yield-hungry portfolio.
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