Please see the below article from EPIC Investment Partners, discussing the recent concerns around liquidity within private credit and how current market volatility may impact investors, received today – 27/03/2026.
Private credit’s liquidity illusion
Financial markets are beginning to hint at something more troubling than a simple inflation scare.
The first explanation for the pressure on short-dated US Treasury yields is obvious enough. Higher oil prices raise inflation fears, make central banks less willing to cut rates quickly and push the front end higher. That much is entirely reasonable.
But it is not the whole story.
If the move were only about inflation and a later path for rate cuts, it would feel cleaner than it does. Instead, volatility has risen, liquidity has worsened and the front end has remained under pressure in a way that suggests something more than a straightforward macro repricing. The market is not just adjusting to higher inflation risk. It also appears to be adjusting to a lower tolerance for leverage, illiquidity and risk.
That matters because once volatility rises and stays high, the consequences spread quickly. Risk models tighten. Leverage looks less comfortable. Positions that seemed manageable in a calmer market suddenly appear too large. At that point, portfolios do not adjust elegantly. Investors sell what they can sell.
That is where private credit comes in.
Private credit has long been sold as a calmer corner of finance: higher income, fewer daily price swings and a patient investor base. But that calm has always depended on an awkward fact being ignored. The assets are illiquid, while the investors still need cash. Pensions have liabilities. Insurers have capital to manage. Wealth managers and family offices may need liquidity precisely when markets are under pressure.
This is why gating matters. Gating is simply the industry’s term for limiting withdrawals when too many investors ask for their money back at once. In practice, it means a fund can tell investors they may receive only part of their cash, and not necessarily when they want it.
The important point is that the need for cash does not disappear. If investors cannot raise money from private credit, they have to raise it somewhere else. That usually means selling listed assets instead. Seen that way, private-credit gates are not a niche sideshow. They are the illiquid mirror image of the same de-risking already visible in more liquid markets.
The problem deepens because private assets are slow to reprice. When public markets fall but private credit is still carried at stale valuations, the illiquid allocation can suddenly look too large and use up more of the portfolio’s risk budget than intended. Investors who might otherwise buy cheaper public assets are then unable to do so. If they need liquidity or need to cut risk, they are forced to sell what they can sell instead — often more liquid risk assets such as high-yield bonds or equities. The diversifier does not absorb the shock; it displaces it.
That is why this matters beyond the world of alternatives. Ultimately, a gate is an admission that a fund’s stated value and its true clearing price are no longer the same thing. So long as the Treasury market remains trapped in this bear-flattening stress, the pressure on those gates is likely to intensify. Private credit may not be the next subprime, but it is becoming the next place where the system discovers its true liquidity limits.
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Marcus Blenkinsop
27th March 2026