Blackstone's (NYSE:BX) flagship private credit fund, BCRED, experienced a monthly downturn in February. This marked the fund’s first loss in over three years. 

The 0.4% decline comes amid growing investor concerns about the liquidity pressures within the sector, Reuters reported.

The Morningstar LSTA index, which tracks publicly traded leveraged loans, fell by 0.8% in February, reflecting broader market challenges.

Despite the decline in performance, BCRED has delivered a 9.5% annualized total return since its inception for Class I shares. It outperformed the leveraged loan market by 100 basis points this year. 

BCRED, a non-exchange-traded business company, expects to invest at least 80% of its total assets in private credit investments. That includes loans, bonds, and other credit instruments issued in private offerings or issued by private companies.

In February, BCRED marked down certain loans, including those linked to Medallia, a software company, according to the Financial Times.

Blackstone's $82.7 billion fund permits quarterly investor withdrawals, and the first quarter saw an unusually high $3.7 billion in redemptions. Blackstone's stock value (BX) has declined by 30% year-to-date. As of March 23, the stock was down 2.61% on the month.

Recently, banks and asset managers have issued warnings or restricted lending in their private credit portfolios during ripples in the market.

BlackRock Inc (NYSE:BLK) limited withdrawals from its $26 billion HPS Corporate Lending Fund after redemption requests surged to 9.3% of the fund's net asset value and Cliffwater’s investor redemption requests from its $33 billion private credit flagship fund exceeded 7%, Bloomberg reported.

JPMorgan Chase & Co. (NYSE: JPM) has begun restricting lending to software companies in its private credit funds, while Morgan Stanley (NYSE:MS) curbed redemptions after investors sought to withdraw nearly 11% of shares from its North Haven Private Income Fund.

Blackstone was contacted for comment.

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