Goldman Sachs Clients Voice Ongoing Unease Over Private Credit Exposure

A top Goldman Sachs executive recently acknowledged what clients had been signaling for months: private markets investors are "relieved to discuss topics other than software exposures and private credit issues." The remark, reported exclusively by the Financial Times, captures the anxious mood that has settled over a roughly $2 trillion private credit market grappling with AI disruption fears, rising redemptions, and a sharp selloff in alternative asset managers triggered by renewed asset-sale troubles at Blue Owl.

Goldman's asset management arm moved to reassure investors in a letter seen by Reuters in late February, disclosing that Goldman Sachs Private Credit Corp posted December inflows 11% above its year-to-date average and a fourth-quarter redemption rate of 3.5%, well below the rate of more than 5% recorded by peers. GS Credit's exposure to enterprise software credit stood at about 15.5% at the end of the third quarter, which Goldman described as toward the low end of the range reported by competitors.

The firm acknowledged the environment is not benign. "As we enter 2026, the private credit landscape is facing volatile macroeconomic conditions, shifting flows in the traded and non-traded BDC market, and accelerating technological change, particularly around AI," Goldman said in the investor communication.

The AI concern is specific and structural: fears that artificial intelligence could erode the earnings power of software companies are weakening confidence in those borrowers' ability to repay loans, prompting investors to reassess exposure, redemption risks, and fundraising prospects. Software companies are significant borrowers in private credit markets, which makes the sector acutely sensitive to any repricing of tech earnings expectations.

The pressure shows up clearly in industry-wide data. Gross inflows for private credit fell to just $1.27 billion in a recent month, less than half the level from a year earlier, according to an analysis citing GSAM documentation. Blackstone's flagship BCRED fund saw record redemptions of $3.8 billion in the first quarter of 2026, far exceeding its 5% quarterly buyback limit, though the fund had the cash and borrowing capacity to meet demands. Blue Owl's troubles over asset sales compounded the unease, triggering a broad selloff in shares of alternative asset managers with private credit exposure.

The systemic dimension of these strains drew a pointed warning from Lloyd Blankfein, who led Goldman through the 2008 financial crisis. Speaking on the Bloomberg News Big Take podcast with David Gura, Blankfein said "the financial system appears to be inching toward another potential catastrophe with everyday Americans exposed to some of the losses." He added that the assets at issue "can be hard to analyze, may feature hidden leverage and can become tough to sell." His comments represent his own assessment and not Goldman's institutional position.

Goldman's own survey data, compiled through its asset management arm, suggests institutional appetite has not yet reversed course. Roughly 62% of surveyed CIOs and CFOs from insurance companies indicated plans to increase private market allocations in 2025, with 58% specifically targeting private credit. That structural demand from large institutional investors remains a floor under the market even as redemption pressures mount at the retail-oriented end.

For Goldman, the tension is that it is simultaneously warning clients about private credit's volatility and actively managing flows through its own platform. The firm's relatively contained metrics on redemptions and software exposure offer meaningful reassurance, but Blankfein's warning and the BCRED episode illustrate that Goldman's internal controls are only part of a much larger picture. With inflows collapsing industry-wide and buyback limits already being tested at major competitors, the resilience of that $2 trillion market will depend less on any single firm's risk management and more on whether withdrawal fears become self-reinforcing.